This article first appeared in The Edge Malaysia Weekly, on January 20, 2020 - January 26, 2020.
Nik Norzrul Thani and Kay Zhuin want the company to differentiate itself from the competition. Photo by Sam Fong/The Edge
FIVE years on, many people may have forgotten the scandal that broke out at T7 Global Bhd, then known as Tanjung Offshore Bhd, involving fraud and money laundering allegations.
A new name, logo, board of directors and management team, and diversification into new areas, have helped give the company a fresh start.
“Many people do not immediately link us with Tanjung Offshore anymore. More importantly, bankers have forgotten and are talking to us again,” T7 Global chairman Datuk Seri Dr Nik Norzrul Thani Hassan Thani tells The Edge in an interview.
It also helps that the integrated oil and gas service provider has been profitable since the financial year ended Dec 31, 2016 (FY2016), and is expected to end FY2019 “slightly better” than FY2018, he says.
The company saw a 90% year-on-year decline in net profit to RM415,000 for the first nine months ended Sept 30, 2019 (9MFY2019), partly due to a 70% drop in other income. Higher income in 9MFY2018 came from a gain on disposal of a former subsidiary that held a property in Birmingham, the UK, comprising a 10-storey office block and 18 parking spaces, for £5.75 million (RM32.24 million).
Revenue rose 3.3% to RM171.07 million y-o-y in 9MFY2019. As at Sept 30, 2019, T7 Global had RM40.35 million in cash and bank equivalents and RM33.29 million in total borrowings, for a net cash position of RM7.06 million.
Still, it has been a tough few years for 58-year-old Nik Norzrul Thani and executive deputy chairman Tan Sri Tan Kean Soon, 55, in turning around T7 Global’s reputation and financial position. “Back then, we had to use our personal creditworthiness to take a loan. Now we are okay,” recalls the chairman.
As at Dec 13, 2019, Kean Soon and his family were T7 Global’s largest shareholders with a 13.84% stake, with Nik Norzrul Thani holding 4.47% as at Sept 4, 2019.
The company has also seen an injection of new blood in the management team, including Kean Soon’s two sons — Jim Tan Kay Zhuin, 29, who is group chief operating officer, and Tan Kay Vin, 28, an executive director.
“This combination of old and new has helped the company to become better,” says Nik Norzrul Thani.
“We are made aware of global issues such as climate change and more sustainable ways of doing business because of them. These are things that we take for granted but for the millennials, they are important. And if we want to be a company that is innovative, high value and sexy, then we have got to differentiate ourselves.”
Meanwhile, Kay Zhuin notes that Petroliam Nasional Bhd (Petronas) has been pushing operators in the O&G industry to adopt digital technologies and data analytics, challenging operators on how differently they can do their jobs.
“On our part, we have over the years become more efficient in the things we do. We have digitised some of our activities, the way we manage people and our campaigns. And when you become more efficient, you have more time to think about things to make yourselves different from others,” he says.
T7 Global scored a small coup when it bagged a contract from Petronas Carigali Sdn Bhd for the provision of underwater inspection services using mini remotely operated vehicles (ROV) last year. “Now we are exploring what more we can do with them instead of just underwater inspection and intervention,” says Kay Zhuin.
(((AFTER THIS ARTICLE T7 GLOBAL WON 5 YEAR SUBSEA CONTRACT WITH PETRONAS CARIGALI) THIS IS AN UMBRELLA JOBS THAT COVER 30 OIL WELL & 7 SUBSEA TREES FOR YEAR 2020 TOGETHER WITH DESTINI & ONE OTHER O&G}}}
A project T7 Global did in 2017 for Vestigo Petroleum Sdn Bhd, a subsidiary of Petronas, is seen as yet another small coup. It involved placing an underwater structure at an abandoned offshore oilfield in Marang, Terengganu, to grow artificial reefs.
(((T7 GLOBAL AGAIN WON UMBRELLA JOB FOR VESTIGO (5 YEARS SUBSEA)))
While the decommissioning of oilfields and the ROV operations are not big markets, Kay Zhuin says the company will continue to follow the trend set by Petronas. However, Nik Norzrul Thani is quick to add that T7 Global will remain focused on “what we are good at”.
“We don’t want to waste resources bidding for everything under the sun. We want to become masters of certain areas. We will look at our strengths, develop them and go into these core areas such as mini ROVs. We won’t bother with things like O&G pipelines because there are already players in the market that are stronger,” he says.
He concedes that T7 Global is not yet in a position of strength.
“We have loyal shareholders who have been with us since the dark days. We hope to reward them but there were a lot of uncertainties following the 14th general election.
“A bright spot is that more institutional investors are piling in. We did explain to them not to expect quick dividends, but if they want positive long-term prospects, we can strive for that,” he says.
T7 Global shares have risen 12.5% in the past five years and closed at 44 sen last Wednesday, giving the company a market capitalisation of RM216.81 million. The stock has gained 18.4% in the past one year, outperforming the FBM KLCI, which lost 5.9% over the same period.
Nik Norzrul Thani believes the worst is over for the company as well as the O&G sector.
“The small players are gone. We believe things will not get worse but better for the industry and us. Consolidation is happening [which is good for the industry] ... we don’t want to have too many players undercutting each other. On T7 Global’s part, we are not cutting our margins. We have walked away [from contract negotiations if the margin is too low]. And today, we find that when we bid for contracts, they are not at floor price,” he says. The company is expecting a better performance in FY2020, he adds.
(((T7 GLOBAL WON TOP SIDE JOB FROM REPSOL: ANOTHER 5 YEAR UMBRELLA JOBS)))
In its Activity Outlook for 2020-2022, Petronas budgeted for capital expenditure of about RM255 billion between 2020 and 2024, with RM50 billion allocated for this year.
Kay Zhuin says T7 Global will be pursuing both greenfield and brownfield jobs. “We are confident of securing some of them. In fact, this coming quarter will determine what we are actually doing for this year.”
The company’s outstanding order book of RM900 million offers earnings visibility over the next four years. Its current tender book stands at some RM3 billion and involves projects in Malaysia, Vietnam, Thailand and India.
Meanwhile, T7 Global’s metal treatment plant in Serendah, Selangor — which will serve as a springboard into the high-value aerospace industry — is ready to take off next month.
Nik Norzrul Thani says the plant had a soft launch “a few weeks ago and we are now getting orders”. It will start contributing to the group’s revenue from this financial year.
To date, the company has invested RM40 million to RM50 million on Phase 1 of the metal treatment plant and expects to recoup the investment in three to five years.
Calvin comments:
After this was published T7 Global won 4 more Job Awards
1) (((AFTER THIS ARTICLE T7 GLOBAL WON 5 YEAR SUBSEA CONTRACT WITH PETRONAS CARIGALI) THIS IS AN UMBRELLA JOBS THAT COVER 30 OIL WELL & 7 SUBSEA TREES FOR YEAR 2020 TOGETHER WITH DESTINI & ONE OTHER O&G}}}
2) (((T7 GLOBAL AGAIN WON UMBRELLA JOB FOR VESTIGO (5 YEARS SUBSEA)))
3) (((T7 GLOBAL WON TOP SIDE JOB FROM REPSOL: ANOTHER 5 YEAR UMBRELLA JOBS)))
4) PROVIDING MAN POWER FOR SAPURA ENERGY
In coming Quarters the Balance Sheet of T7 Global will be BURSTING WITH PROFITS
It will then rise up to join the bull run of Carimin, Penergy & Dayang
https://klse.i3investor.com/blogs/www.eaglevisioninvest.com/2020-01-30-story-h1482963045-T7_Global_seeks_to_drive_group_forward_with_a_blend_of_old_and_new_Calv.jsp
