T7 Global showing likely to be affected by BHS delays
Phillip Research cut its 2025-2026 earnings per share forecasts by 16% to 17% for T7 Global to account for slower work progress and lower margins.
It maintains its 'buy' call with a lower target price of 34 sen from 66 sen a share on the company after rolling forward its valuation.
The key risks to its stock call include operational delays at its existing mobile offshore production units or Mopus, further postponement in BHS works, and higher-than-expected operating costs
Given that the BHS project accounts for 17% and 21% of T7 Global's 2024 revenue and profit after tax, respectively, any continued delays will weigh on its industrial solution division and pose downside risks to its 2025-26 earnings forecasts, the research house stated.
T7 Global completed Phase 1 of the KLIA BHS upgrading work in KLIA Terminal 1 in February 2025.
However, progress on Phases 2 and 3 has slowed due to the challenges of carrying out works within a live airport environment.
The remaining works are now anticipated to be delayed by between one and 1.5 years from the original completion timeline of December 2025.
A formal revision to the project timeline has yet to be officially confirmed.
Phillip Research expects T7 Global's energy division to anchor long-term growth.
T7 Global has emerged as the largest beneficiary of the recently rolled out maintenance, construction and modification (MCM) packages, having secured RM1.7bil worth of contracts.
This lifts its total outstanding order book to RM4.5bil.
Its Mopus, Elise and Shirley, which began operations in July 2023 and August 2024 respectively, are expected to contribute full-year earnings in 2025.
The group is actively bidding for RM13.7bil worth of contracts.
These include several floating production, storage and offloading vessels, MCM services, well services, offshore facility decommissioning and government-related projects.
Given its strong order book and robust tender pipeline, Phillip Research expects the group's energy division to remain its primary earnings driver, going forward.
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