T7 Global shares up 35% on heavy trade

Placement exercise, new developments give stock a boost

PETALING JAYA: Shares of T7 Global Bhd, the company formerly known as Tanjung Offshore Bhd, soared to a high of 56.5 sen, up 34.5% on heavy trade due to its upcoming placement exercise along with new developments and shareholders coming into the company.

It was one of the most actively traded counters of the day, and closed eight sen higher to 50.5 sen on a volume of 31.2 million shares.

At this price, the stock has a market capitalisation of RM216mil with a price earnings ratio of some 28 times.

Seen as a speculative stock, T7 hit its 52-week high of 66.5 sen on Feb 2, subsequently hitting its 52-week low of 30 sen on May 14.

The fortunes of the company could be changing, though, as Berjaya Group tycoon Tan Sri Vincent Tan Chee Yioun acquired 21 million shares via direct business transactions or a 5.03% stake on May 15.

On May 21, he acquired a further 1.2 million shares in the open market, upping his stake to 22.2 million shares or 5.29%.

On the same day, Lembaga Tabung Haji sold one million shares and ceased to be a substantial shareholder. The single largest shareholder in the company is its executive deputy chairman, Tan Sri Tan Kean Soon, with an 11.28% stake.

Also on June 1, its independent director, Ahmad Syafiz Hazieq Ahmad Zahid, resigned due to personal commitments. Two weeks earlier on May 3, T7 had proposed to under- take a private placement of up to 20% of its issued shares, as well as a proposed diversification of its existing principal activities to include manufacturing and treatment of aerospace parts.

It also proposed to purchase up to 10% of its issued shares through stockbrokers to be appointed at a later date.

It told Bursa Malaysia that should it be able to purchase its own shares, it intends either to cancel the purchased shares, retain them as treasury shares, or a combination of both.

At present, T7 has some 419.5 million shares, which include 2.48 million treasury shares.

Should the 20% placement take place, this will see a total of up to 92.28 million new T7 shares being issued.

Through this placement, the company is targeting to raise between RM35mil and RM38.76mil, depending on a minimum or maximum scenario.

From the proceeds, some RM30mil will be utilised in the first 12 months to set up a specialised metal treatment plant for its new business.

Meanwhile, some RM4.8mil to RM5mil will be used for working capital purposes within the next 24 months.

Currently, the T7 Group is principally involved in the provision of plant and platform maintenance, vessel management and chartering, fabrication and construction, drilling and production, engineering consultancy and field development, among others, in the oil and gas sector.

Last year, T7 had announced its plan to diversify its business to other industries, and had set up a joint-venture (JV) arrangement with Raymond Kilgour, who has more than 20 years of experience in providing machining of aerospace parts and metal treatment services to global aerospace parts manufacturers and assemblers.

The JV was formalised when T7 Aero Sdn Bhd signed a JV agreement with KOV Ltd on May 9, 2017, a company helmed by Raymond.

“The objective is to set up a specialised metal treatment plant in Malaysia to provide non-destructive testing, passivation of steels, chromic acid anodising, aluminium etching, tartaric acid anodising and chrome planting for aerospace parts to aerospace parts manufacturers,” said T7.

As part of the JV, T7 Kilgour Sdn Bhd was formed as a special-purpose vehicle to ven- ture into this new business.

T7 Aero holds a 60% equity interest in T7 Kilgour, with the remaining 40% being held by KOV Ltd.

T7 Aero will primarily be involved in providing funding and operational and local support, while KOV will provide the technical expertise.

A location for its new factory was identified, and in September 2017, the T7 Group acquired two acres of land at the UMW High Value Manufacturing Park in Serendah, Selangor, for the purpose of constructing the specialised metal treatment plant.

The construction commenced in February 2018 and is expected to be completed by the end of 2018.

“Barring unforeseen circumstances, the management of T7 expects the operations in the new specialised metal treatment plant to commence by the first quarter of 2019,” said T7. The directors of T7 Kilgour are Datuk Seri Nik Norzrul Thani, Tan Kay Vin, Raymond, Paula Jose Kilgour, Muhammad Sabri Ab Ghani and Andrew James Dewell.

Nik Norzrul and Tan are directors nominated by T7, whereas the remaining directors of T7 Kilgour are nominated by KOV.