Pekat’s proposed buy of EPE Switchgear synergises well with ops
KUCHING: Solar Engineering, production, construction and commissioning (EPCC) player Pekat Group Bhd’s (Pekat) proposed acquisition of a stake in switchgear manufacturer EPE Switchgear (M) Sdn Bhd (EPE Switchgear) will synergise well it’s with current business operations says analysts at MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research).
To recap, Pekat’s whollyowned subsidiary, Pekat Teknologi Sdn Bhd, had recently signed a memorandum of understanding (MoU) with EPE Switchgear’s sole shareholder Apex Power Industry Sdn Bhd to negotiate exclusively on the potential acquisition until June 30, 2024 or a mutually agreed later date.
In a corporate update on
May 8, the research arm guided that they viewed the proposed acquisition positively as it provides a lot of synergy for Pekat as EPE Switchgear’s manufactured switchgears and distribution transformers are crucial components in the solar photovoltaic (PV) systems offered by those in the EPCC space such as Pekat.
“We believe the acquisition will position Pekat favourably to ride on the expected improvement in demand over the long term that will be catalysed by the growing solar industry that is backed by conducive government policies and the substantial capex for projects involving energy transition, especially on the upgrading of grid infrastructure,” said the research arm.
On a separate note, Pekat’s upcoming first quarter of financial year 2024 (1QFY24) results release on May 28 is expected to showcase a performance that is on par with its 4QFY23 performance where the group reported quarterly revenue of RM58.4 million and a core net profit of RM3.4 million.
“We have projected a FY24 revenue of RM234.4 million and a core net profit of RM17.4 million, which will mainly be driven by commercial and industrial (C&I) and residential roo op solar jobs.
“Meanwhile, we revised our FY25F earnings estimates slightly higher by +6.0 per cent to RM22.5 million on the back of management’s more optimistic outlook on roo op solar,” the research arm opined.
Currently, Pekat’s net cash position is RM26.1 million with a potential Shah Alam land disposal expected to add another RM19.6 million to this coffers. MIDF Research reckons is accommodative to fund further growth and investments
Pekat’s outstanding order book sits at circa RM180 million while it aims to secure about RM200 million worth of Corporate Green Power Programme (CGPP) related EPCC projects.
And while Pekat has yet to be involved in the provision of solar PV solutions for data centres, its management has guided that it is looking forward to targeting the segment as it is no stranger to data centrerelated jobs, having working on earthing and lighting protection (ELP) solutions for data centres by Bridge and Keppel.
“It is currently constructing the ELP systems for facilities by Yondr and AirTrunk. Management is positive on prospects, backed by the mushrooming of data centres,” said the research arm.