Pecca in driver's seat to notch another record year

Pecca Group Bhd’s share price has been consolidating since early Jun this year. Financially, the company looks solid.

For the year ended June 30, 2024, the company reported a 55% year-on-year surge in net profit to RM55 million, on record revenue of RM242.5 million. Subsequently, its quarterly net earnings rose 12% y-o-y to RM14.6 million in 1QFY25.

Based on its book value per share of 30 sen as of end-Sep 2024, the stock is currently trading at a Price / Book Value multiple of 4.6x. The group’s financial position remains healthy, backed by net cash holdings of RM121.7 million or 16.7 sen per share as of end-Sep 2024.

The car upholstery maker is likely to see much better growth if it is successful in its overseas expansion. The company said it is negotiating to expand its replacement equipment manufacturing business to countries such as Australia, the Middle East, and Europe.

The expansions may involve joint ventures, partnerships, or acquisitions. The company is seeking to diversify its revenue base and reduce reliance on its mainstay original equipment manufacturing business. Pecca’s expansion abroad comes as rising car sales boosted the company’s profits to record highs.

Locally, new vehicle sales could exceed last year’s record high and hit 800,000 units this year. According to the Malaysian Automotive Association, this was driven by robust demand for national cars.

The company serves Perodua, the country’s biggest carmaker by volume. Its other customers are the likes of Japanese brands Toyota, Nissan and Mitsubishi in Malaysia,

It also plans to secure partnerships with these brands for their new product cycles, supplying seat variants and other components. Pecca, which is the sole supplier of leather upholstery to Perodua, will be gearing up to support the national car company’s ambition to roll out Malaysia’s first electric vehicle (EV) by the end of 2025.