by M JAY SHEILA / pic source: t7global.com.my

T7 GLOBAL Bhd’s shares have been upgraded to a ‘Buy’ at BIMB Securities Sdn Bhd with a higher sum-of-parts (SoP) derived target price (TP) of 52 sen. The TP implies 10 times financial year 2024 (FY24F) price to earnings ratio (P/E).

T7 Global shares have three ‘Buy’ calls, with a 12-month consensus TP of 52 sen, promising a return potential of 10.6%.

The upgrade to a ‘Buy’ came after T7 Global bagged a two-year contract with Tenaga Nasional Bhd (TNB), valued at RM21.17 million, spanning from Sept 29, 2023, to Sept 28, 2025.

Under the terms of the contract, T7 Global, through its subsidiary T7 Wenmax Sdn Bhd, will supply 79,800 units of single-phase radio frequency smart metres, and 19,950 units of three phase radio frequency smart metres.

The development represents a substantial stride in TNB’s ongoing efforts to implement the advanced metering infrastructure (AMI).

In a note released today, BIMB Securities said while the contract value is rather small, it was positive that the company may generate recurring income from similar service given TNB’s target to install up to nine million units by end-2029.

“In near term, we expect a bump-up in earnings in the third quarter of 2023 (3Q23) driven by new income from TSeven Elise’s mobile offshore production unit (MOPU) which has achieved first gas on July 11, 2023.

“Besides that, there will also be revenue recognition from construction progress of the Kuala Lumpur International Airport (KLIA) baggage handling system (BHS) contract following preparation works done in 2Q23,” it said.

BIMB Securities is optimistic on T7 Global’s earnings growth to be driven by new recurring income from two MOPU assets and its expanded scope of services.

Its top shareholders are deputy chairman Tan Sri Tan Kean Soon with a 9.88% stake, Abyssina Resources (M) Sdn Bhd (7.43%) and Puan Sri Shirley Law Siong Hong (5.09%). It has a market capitalisation of RM 348.6 million.

At 11.30am today, the stock was trading at 47 sen, with 101,300 shares exchanging hands.