T7 Global positive on aerospace venture

KUALA LUMPUR: T7 Global Bhd, which believes its diversification effort into aerospace manufacturing will break even in three to four years, is positive about the prospects moving forward with the oil price stabilising and more contract awards from Petroliam Nasional Bhd (Petronas).
T7, formerly Tanjung Offshore Bhd, is principally involved in providing comprehensive services to the oil and gas (O&G) industry. It has an order book of RM800 million to keep it busy for the next few years and a tender book of RM2 billion to sustain the group’s operations and diversification plans.
Executive deputy chairman Tan Sri Tan Kean Soon said O&G is still its core business, constituting 80% of its revenue.
“Over the past few years, oil price plunged low but as of today, we’re hitting over US$70 per barrel, hence more and more projects will be coming from Petronas. We’re also bidding for a number of tenders, hopefully by year end or next year, things will look up for the O&G industry,” he told a press conference after its EGM today.
Tan said T7 is banking on its three businesses – O&G, aerospace and infrastructure & construction.
On its diversification into aerospace, the group expects its factory in Serendah to be operational by year-end and for it to obtain the necessary accreditation by the first quarter next year, before getting customer approvals and subsequently the aerospace contracts. It is partnering Kilgour Aerospace Group, a UK high value manufacturing company to set up the surface metal treatment facility.
Chairman Datuk Seri Dr Nik Norzrul Thani said an aerospace contract has a tenure of 30-40 years and provides a good margin, generally better than O&G contracts. He said there is a backlog on supply, adding that the government is also interested to push the agenda for aerospace.
“Our aim is to become a high value manufacturing company. We aim to depend less on O&G ultimately, but growing it at the same time.”
On dividends, Nik said the group is tightening its belt now to invest for the future.
“If you’re willing to wait and have staying power for the long term, we’re all involved. It’s our aim to make sure the value (of the company) goes up, by being in an industry and having projects that make money. We feel aerospace is one of them.”
Meanwhile, he explained that the review of the East Coast Rail Link by the government will not affect T7 as they are just bidding for the work packages at this stage.