T7 Global Bhd hopes to see its gearing drop following the commissioning of its Bayan Mobile Offshore Production Unit (Mopu) project.

       The oil & gas (O&G) service provider says the project will be the main revenue driver for the group in the foreseeable future and the drop in gearing would be supported by the rental cashflow it will receive once the Bayan Mopu project is commissioned.

       “The financial year ending Dec 31, 2022 (FY22) will be one of the best years because the Bayan Mopu project will start to contribute to our revenue from the third quarter of FY22.

       “This project was awarded to us by Petronas Carigali and what is notable here is that it has been years since a newly built Mopu has been commissioned in Malaysia, as most of them are usually recommissioned,” T7 chairman Datuk Seri Nik Norzrul Thani N. Hassan Thani tells StarBizWeek.“The project duration is for 10 years. This should contribute significantly to the group as the main revenue driver from next year.

       “Most of our capital was spent to build this Bayan Mopu but once it is commissioned, we would see the revenue and rental coming in,” he adds.

       T7’s gearing ratio was at circa 0.8 times as of Sept 30, 2021. Its total debt stood at RM390.9mil as at Sept 30, 2021.

       “We have been in the black all these while even throughout the Covid-19 pandemic. We have seen our rivals being challenged but because we are focused on niche areas, we are relatively low on our leverage,” Nik Norzrul says.

       “If not for the Bayan Mopu, we would not be so highly geared. But it is only for a while. Now that we are ready, we will be quite safe. Hopefully FY22 will be a good year for us once the Bayan Mopu kicks in,” he adds.

       On the outlook for oil prices, he said the commodity should trend at around US$60 to US$70 (RM251.73 to RM293.68) per barrel (Brent brude) next year and the group will be stable for as long as there are no huge fluctuations in the price.

       T7’s energy or O&G division currently contributes some 80% of its revenue and this is poised to grow when the Bayan Mopu is commissioned.

       The group also derives sales from its aerospace and construction divisions.

       “We also want to focus on the aerospace and construction divisions, which will grow with the energy business division.

       “We are targeting 70% revenue from energy and 30% from the other divisions. This will enable us to reduce our reliance on the energy division,” Nik Norzrul says.

       He explains that the group received much advice to diversify, especially during the peak of the oil crisis several years ago.

       “I remember Petronas telling us that we have to diversify. So we did that and we went into the aerospace industry – this has a high cost of entry but it gives us long-term sustainability.

       “Covid-19 was the black swan that hit the aerospace division but we understand this is temporary. Some competitors suffered but we sustained.

       “Even though we don’t get many contracts from the aerospace companies now, we have some projects from other manufacturing companies,” he adds.

       He notes that the group could perform manufacturing contracts through its aerospace division.

       “Since we are able to do aerospace industry work, other types of work are easily doable. We hope that things will pick up in the aerospace industry. We are seeing some order queries coming in now,” Nik Norzrul says.

       For its construction division, it is currently working on two projects, namely the Endau Mersing Fish Processing Park and an X-Ray facility for the Customs Department.

       T7’s O&G division has an outstanding orderbook of about RM2.3bil, which is expected to last 10 years, while it has a tender book of about RM3bil.

       “Based on our historical success rate, we always do get something. We tender for work that we are capable and competent in and we don’t believe in bidding for every job that comes up as there are companies that underbid. We need to make a premium from it,” Nik Norzrul says.

       He says the group is planning to roll out its sustainability plan next year to raise its environmental, social and governance (ESG) credentials.

       “We see this trend of O&G companies moving into green energy. For many of the younger employees, ESG is important to them and sometimes they even ask if the company is environmentally friendly.

       “So it is inevitable that we have to go green,” Nik Norzrul says.