T7GLOBAL: Strong Performance on Robust Margins, Forecasts Upgraded
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates a robust financial performance for the company, with its core net profit for the first nine months of fiscal year 2025 (9M25) significantly exceeding expectations. The company reported a 9M25 core net profit of RM33.9 million, marking a 27.1% year-on-year increase, which already accounts for 99% of the full-year forecasts.
Financial Highlights
The stellar performance was largely attributed to better-than-expected operating margins. Revenue for 9M25 also saw a healthy increase, reaching RM528.2 million, up 15.1% year-on-year. Quarterly results further underscored this momentum, with the third quarter of 2025 (3Q25) core net profit surging by 115.4% quarter-on-quarter to RM18.3 million, supported by a 24.7% increase in revenue to RM216.1 million.
Drivers of Growth
The expansion of the EBITDA margin was a key factor in the strong earnings. For 9M25, the EBITDA margin expanded by 2.4 percentage points to 18.2%, primarily driven by robust margins within both the energy and industrial solution segments. The energy division, in particular, demonstrated stronger performance, growing by 59.2% year-on-year in 9M25, partially offsetting a weaker performance from the industrial solution division. In 3Q25, the energy segment continued to strengthen its margins, contributing to a 1.7 percentage point quarter-on-quarter improvement in overall EBITDA margin.
Outlook and Analyst View
Looking ahead, the energy division is projected to remain the group’s primary earnings driver, underpinned by a strong order book valued at approximately RM3.7 billion and a robust tender pipeline, ensuring long-term earnings visibility. Following the better-than-expected operating margins, the investment bank (PhillipCapital) has revised its earnings per share (EPS) forecasts for 2025-2027 upwards by 6-24%.
Consequently, the 12-month target price has been increased to RM0.32 from the previous RM0.28. However, reflecting the belief that the company’s positive prospects are largely priced into its current valuation, the rating has been adjusted from BUY to HOLD. Key risks to the outlook include potential fluctuations in work orders, unforeseen delays in projects, and variability in operating costs.
