Pekat Group (PEKAT | 0233)

Last Price: RM1.09 | Technical Call: BUY

Company Background. Pekat Group (Pekat) is a leading provider of renewable energy (RE) solutions in Malaysia, specializing in the installation of solar photovoltaic (PV) systems and the provision of earthing & lightning protection (ELP) systems. The group's solar division offers comprehensive engineering, procurement, construction, and commissioning (EPCC) services for residential, commercial, industrial, and large-scale solar PV projects. In its ELP division, Pekat has earned a strong reputation for providing reliable solutions for prominent infrastructure projects such as MRT, LRT3, and data centers.

Prospects. (i) Aims to secure additional solar PV EPCC projects, supported by government-driven green energy initiatives. These include the expansion of rooftop solar installations under Net Energy Metering (NEM) 3.0, upcoming large-scale solar (LSS) awards under LSS5, and the introduction of the Corporate Renewable Energy Supply Scheme, (ii) ELP division is poised for growth, leveraging its proven expertise to capitalize on the rising foreign investment in Malaysia's data center sector, with up to 7 gigawatts of capacity projected by 2030, and (iii) The recent acquisition of a 60% stake in EPE Switchgear enhances its position in the power distribution equipment market, driving future earnings, with the segment expected to contribute 25% or more to the group's profits.

Financial Performance. In 9MFY24, Pekat posted higher revenue of RM196.8mil (+16.4% YoY) with a PAT of RM14.7mil (+44% YoY). This was primarily driven by accelerated project execution across the solar division's commercial, industrial, and residential customer segments, increased customer demand in the trading division, and expedited project completion in the ELP division.

Valuation. Pekat is currently trading at a FY26F P/E of 18.6x, which is lower than the Bursa Industrial Production Index's 23.8x. In comparison, Samaiden Group, a renewable energy solutions provider specializing in the EPCC of solar PV systems and power plants, trades at a higher FY26F P/E of 20x.

Technical Analysis. Pekat posted two long positive candles in a row and pushed above the key RM1.05 resistance yesterday, which likely indicates the return of buying interest. As the stock has surged to a new all-time high, a bullish outlook can be expected here.

A bullish bias may emerge above the RM1.05 level with stop-loss set at RM0.97, below the 20-day EMA. Towards the upside, near- term resistance level is seen at RM1.20, followed by RM1.30.

Entry: RM1.05-1.09

Target: RM1.20, RM1.30

Exit: RM0.97

Source: AmInvest Research - 7 Jan 2025