Pekat Group Berhad (Pekat) is expected to continue its strong performance, supported by robust growth in its rooftop solar installations and increasing demand for earthing and lightning protection (ELP) services. The company's current share price of RM0.90 represents a potential return of 46.7%, with an unchanged target price of RM1.32 set by MIDF Stock Broking House, BUY rating also maintained.

Pekat's prospects are buoyed by the anticipated award of significant Corporate Green Power Programme (CGPP) contracts. The company aims to secure EPCC contracts for two solar farms with capacities of 29.99MW and 10MW, valued at approximately RM110 million and RM38 million respectively. The ELP segment is also set to benefit from the growing number of data centre projects, with Pekat recently winning a RM21.8 million ELP project for a hyperscale data centre at Elmina Business Park and working on nine other data centre projects.

The ELP division, which historically generates around RM30 million in revenue annually, is projected to experience a growth of 50% to 80% in FY25 and FY26 due to the data centre boom. For the first half of FY24, this segment has already brought in RM20.6 million in revenue.

In addition, Pekat is progressing with the acquisition of a 60% stake in EPE Switchgear Sdn Bhd. This acquisition, expected to be finalised by the end of the year, includes a profit guarantee from Apex Power Industry Sdn Bhd ensuring a consolidated profit after tax (PAT) of no less than RM48 million over three years. The RM96 million purchase price implies a PE multiple of 10.8x FY23 PAT, which is expected to strengthen Pekat's position in the power distribution market and facilitate entry into new foreign markets.

Pekat's current order book totals RM206.8 million, primarily from rooftop solar projects, and is projected to grow to RM320 million with new CGPP EPCC contracts. The company's commitment to expanding its business, supported by favourable policies such as the National Energy Transition Roadmap (NETR) and the upcoming Large Scale Solar 5 (LSS5), underpins its positive long-term outlook. The target price of RM1.32 is based on a forward PER of 28x, reflecting the company's historical mean.