Potential for T7 Global to grow its earnings
In a report, the research house said between its MCM services and well decommissioning activities, setbacks from T7 Global's baggage handling system contract delays due to logistical constraint should be addressed.
It added it was optimistic about the group remaining an emerging player in the offshore maintenance and well decommissioning space.
'From the second quarter of 2025 (2Q25), the company will be focusing on executing its order book worth RM4.4bil.
'The bulk of the order book comes from the MCM and hook-up and commissioning services contracts that it secured from new clients in Peninsular Malaysia including Jadestone Energy Plc, IPC Malaysia and Petrofac (M-PM304) Ltd,' the research house pointed out.
T7 Global has also secured a 53-well plug and abandonment (P&A) contract from Petroliam Nasional Bhd which is expected to be completed by 2027 or 2028.
'The Enya rig that is dedicated for P&A work has completed nine wells in Sabah and subsequently been mobilised for works in Peninsular Malaysia,' BIMB Securities said.
On the group's earnings, the research house noted that for the first quarter ended March 31, 2025, revenue increased to RM138.8mil compared with RM132.5mil in the same quarter a year ago.
T7 Global's earnings rose to RM7.04mil compared with RM4.61mil a year ago on the back of revenue contribution from TSeven Shirley mobile offshore production unit (mopu) which commenced operations in Nong Yao field (Thailand) in 3Q24, and higher demand for specialist products.
BIMB Securities said earnings grew despite a large jump in finance cost which more than doubled to RM17.6mil.
'Given the rising finance cost, we cut our FY25 to FY27 earnings estimate by 25% to 31%.
'However, our earnings estimate implies an earnings growth of an 11% compounded annual growth rate over FY24 to FY27,' it said.
The group's borrowings, as of 1Q25, stood at RM1.4bil, while its net gearing ratio had risen to the peak of 3.3 times in 3Q24 mainly due to purchase of jack-up rig Enya and financing for two mopu projects namely T7 Elise and Shirley.
It should be noted that T7 Global planned to reduce this to two times by the end of 2026.
The research house said it maintained a 'buy' call on T7 Global with a target price of 46 sen, implying a 7.1 times FY25 price-to-earnings-ratio.
At the time of writing, T7 Global's share price was 22.5 sen.
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