Pekat Group Berhad (Pekat) continues to show resilience in its financial performance, reporting a core net profit of RM8.3 million for the first half of FY24. This figure aligns closely with expectations, accounting for 47.7% of the full-year projections. Despite a -4.9% year-on-year decrease in revenue to RM56.6 million, the company's strong performance in earthing and lightning protection (ELP) jobs has helped counterbalance this decline.
Analysts at MIDF remain optimistic, with a BUY call on Pekat and a target price (TP) maintained at RM1.32. This TP reflects a projected share price return of +37.5% based on the current trading price of RM0.96. Analysts are confident in the company's ability to deliver, supported by its growing order book and the anticipated pickup in solar photovoltaic (PV) projects.
In the second quarter of FY24, Pekat experienced a -22.5% drop in revenue from its solar division, amounting to RM33.2 million. This decline was partly due to delays in commercial and industrial (C&I) solar projects. However, revenue from ELP surged +47.1% to RM11.6 million, and the trading division saw a +34.8% increase to RM11.9 million, bolstering overall performance.
Pekat's current outstanding order book stands at approximately RM207 million, primarily from rooftop solar projects. This is expected to grow to around RM320 million by the end of the year, driven by new contracts and ongoing projects such as those related to the Corporate Green Power Programme (CGPP). Additionally, Pekat has secured a RM21.8 million ELP systems contract for a hyperscale data centre, further strengthening its portfolio.
Looking ahead, Pekat is preparing to acquire a 60% stake in Apex Power Sdn Bhd for RM96 million, which will give it control over EPE Switchgear (M) Sdn Bhd. This strategic acquisition is anticipated to enhance Pekat's capabilities in power distribution equipment and provide access to new markets, expected to significantly boost its earnings starting FY25.
