T7 Global banks on oil & gas, aerospace for growth

KUALA LUMPUR: Diversified group T7 Global Bhd which is looking to complete the construction of its aerospace manufacturing plant next year, will be banking on contracts won under its oil and gas segment as a main income stream for this year.
Shareholders approved the sale of its entire equity interest in 7 New Market Street Holdings Ltd for £5.75million (RM31.45 million) at an EGM today, proceeds of which will be used to fund its projects and undertakings, primarily the aerospace plant.
For the financial year 2016, the products and services segment contributed about 74% of the group’s revenue while the engineering equipment services contributed 26%.
The group which is currently in the oil and gas, property and construction businesses is looking to secure at least one or two projects from its RM3 billion oil and gas tender book.
Earlier this year, the group announced that its subsidiaries Wenmax Sdn Bhd and Tanjung Offshore Services Sdn Bhd have collectively bagged six contracts from Petronas Technical Services Sdn Bhd, Sabah Shell Petroleum Company Ltd and Repsol Oil & Gas Malaysia Ltd for a combined contract value of RM260 million.
T7 Global recently returned to the black in the third quarter ended Sept 30 after recording a net profit of RM2.97 million mainly driven by one-year extension to its construction work request contract from Petronas Carigali Sdn Bhd.
The group’s chairman Datuk Seri Dr Nik Norzul Thani Nik Hassan Thani said T7 Global is anticipating a good year on the back of the projects secured and potential contract wins as well as joint venture partnerships, to maintain its profitability.
The aerospace segment represents the group’s efforts to diversify its revenue stream away from the oil and gas segment.
The plant to manufacture hard metal components of planes is the culmination of its unit T7 Aero Sdn Bhd’s joint venture partnership with UK based KOV Ltd to incorporate T7 Kilgour Sdn Bhd last May.
“We’ve identified a site and we hope to do groundbreaking soon. We have appointed contractors and consultants to look at factory development and are also sending people for training,” Nik Norzul said at a media briefing after the group’s EGM today.
The segment is expected to be the “real impetus” for the group to remain profitable in the future, projected to churn a revenue of RM180 million a year once operating at full capacity.
The plant is expected to run at a capacity of 20-30% in the first year of operation and orders are expected to come in early next year. A capital expenditure of RM50 million is expected to be rolled out over the course of three years for the project.
Nik Norzul noted that one of the constraints is in terms of a skilled workforce as training and expertise is scarce in Malaysia. Hence, T7 Global is investing in technical expertise and its human capital which includes sending staff to the United Kingdom for training.
Its construction unit T7 Kemuncak Sdn Bhd recently formed a joint venture (JV) with China Construction Third Engineering (M) Sdn Bhd (CCTE Malaysia) to tender for mega infrastructure projects, including the Terengganu portion of the East Coast Rail Link (ECRL), Mass Rapid Transit (MRT), Light Rail Transit (LRT) projects and construction business in Malaysia.
The JV entity has also signed a memorandum of understanding with Terengganu state government-linked company Eastern Pacific Industrial Corporation Bhd and CMC Engineering Sdn Bhd to form a consortium to bid for the ECRL project.