Broker Name: UOB Kay Hian
Date of Report: Monday, 25 August 2025
Powering Growth: Pekat Group Berhad Delivers Strong 2Q25 Results and Bright Outlook
Overview: Robust Performance and Upbeat Prospects for Pekat Group Berhad
Pekat Group Berhad, a leading Malaysian provider of solar PV and earthing & lightning protection solutions, continues to shine in the energy sector. The company’s latest quarterly results underscore its formidable market presence and growth trajectory, as it navigates industry shifts and captures new opportunities in renewable energy and power distribution.
Company Snapshot: Pekat Group Berhad at a Glance
- Sector: Energy
- Bursa Malaysia Ticker: PEKAT MK
- Market Cap: RM1,070.6 million (~US\$253.3 million)
- Shares Issued: 645 million
- 52-week High/Low: RM1.67 / RM0.82
- Major Shareholders: Chin Soo Mau (34.9%), Tai Yee Chee (8.8%)
- FY25F NAV/Share: RM0.37
- Target Price: RM2.00 (Upside: +20.5%)
- Recommendation: BUY (Maintained)
2Q25 Financial Highlights: Accelerating Growth Amid Market Transition
Pekat Group delivered a stellar performance in 2Q25, with net profit surging 136% year-on-year (YoY) to RM11 million, though slightly lower quarter-on-quarter (QoQ) by 9%. This exceptional YoY growth was driven by:
- Strong contribution from EPE Switchgear (power distribution equipment)
- Healthy progress on Corporate Green Power Programme (CGPP) EPCC projects
- Robust demand for earthing and lightning protection (ELP) services
The sequential earnings dip was attributed mainly to reduced residential solar demand following the expiry of government incentives.
| Metric |
2Q25 |
QoQ Change |
YoY Change |
1H25 |
YoY Change (1H) |
| Revenue (RM m) |
127.0 |
-15.5% |
+124.5% |
277.3 |
+142.8% |
| Gross Profit (RM m) |
35.4 |
-8.4% |
+111.2% |
74.0 |
+134.5% |
| EBIT (RM m) |
18.6 |
-8.6% |
+161.8% |
38.9 |
+202.9% |
| Net Profit (RM m) |
11.0 |
-8.6% |
+135.8% |
23.1 |
+172.9% |
Segmental Revenue Breakdown
| Segment |
2Q25 (RM m) |
QoQ % |
YoY % |
1H25 (RM m) |
YoY % (1H) |
| Solar Photovoltaics |
62.6 |
-32.6% |
+88.8% |
155.4 |
+122.7% |
| ELP (Earthing, Lightning Protection) |
14.9 |
-8.1% |
+28.7% |
31.1 |
+50.9% |
| Trading |
14.7 |
+9.6% |
+23.9% |
28.1 |
+18.0% |
| Power Distribution Equipment (EPE Switchgear) |
34.8 |
+24.9% |
N/A |
62.7 |
N/A |
Dividend and Capital Management: Rewarding Shareholders
Pekat surprised the market with a 1 sen/share interim net dividend in 2Q25, reflecting its commitment to shareholder returns and active capital management. Management is targeting a sustainable annual dividend payout through 2025-2027, subject to major M&A activity.
Key Financials: Strong Growth and Improving Margins
| Year to 31 Dec (RMm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
227.5 |
291.1 |
592.5 |
640.9 |
670.6 |
| EBITDA |
21.0 |
38.3 |
88.7 |
101.5 |
108.2 |
| Net Profit (adj.) |
13.9 |
22.0 |
50.1 |
56.1 |
61.0 |
| EPS (sen) |
2.2 |
3.4 |
7.8 |
8.7 |
9.5 |
| PE (x) |
76.9 |
48.6 |
21.4 |
19.1 |
17.6 |
| Net Margin (%) |
6.1 |
7.6 |
8.5 |
8.7 |
9.1 |
| Dividend Yield (%) |
0.6 |
0.0 |
1.2 |
1.2 |
1.2 |
Business Segment Analysis: Solar, ELP, and Switchgear Drive Growth
Solar Photovoltaics
- Revenue up 89% YoY (RM62.6m), powered by both residential solar and large-scale CGPP EPCC projects.
- QoQ revenue fell 33% post-SolaRIS rebate expiry (Apr 2025) and NEM 3.0 program conclusion (Jun 2025), indicating sensitivity to policy incentives.
Earthing, Lightning & Protection (ELP)
- Revenue rose 29% YoY to RM14.9m, supported by healthy project execution, especially from data centre projects.
- Sequential revenue dipped 8% due to slower project progress.
Power Distribution Equipment (EPE Switchgear)
- Revenue leapt 25% QoQ to RM24.9m, accounting for 27% of group revenue.
- Secured RM232m in Tenaga Nasional Berhad (TNB) tenders for supplying low and medium-voltage switchgears in 1H25, ensuring strong orderbook visibility.
- Won an additional RM31.32m TNB contract for switchgear supply and maintenance, expanding YTD contract wins to RM263m and lifting the orderbook to RM630m.
Outlook: Mainboard Transfer, Orderbook Expansion, and Dividend Growth
- Pekat’s mainboard transfer is on track for end-2025, expected to broaden its investor base.
- No changes to core earnings forecasts, but 2025-27 net DPS raised to 2 sen/share, implying a 1.2% yield amid strong earnings momentum.
- Blue-sky target price of RM2.00, based on 23x PE and 2026 EPS of 8.7 sen/share, factors in potential RM500m additional orderbook in 2026 and possible recurring income from large utility-scale concessions.
Environmental, Social, and Governance (ESG) Update
- Environmental: Installed 203.2 MWp solar PV systems in 2024, reducing an estimated 199,319 tonnes of CO2 emissions.
- Social: Workforce of 309, with 31% female, and RM30,000 in contributions to NGOs, education, and children’s welfare.
- Governance: Six-member board, 4 Independent and 2 Non-independent (including GCEO), with 33% women representation.
Key Metrics and Financial Ratios
| Year to 31 Dec (%) |
2024 |
2025F |
2026F |
2027F |
| EBITDA Margin |
13.1 |
15.0 |
15.8 |
16.1 |
| Net Margin |
7.6 |
8.5 |
8.7 |
9.1 |
| ROA |
11.3 |
20.9 |
19.3 |
17.5 |
| ROE |
5.3 |
8.4 |
8.7 |
8.7 |
| Debt to Equity |
38.2 |
42.6 |
25.8 |
16.7 |
Investment Case: Why Pekat Group Remains a BUY
- Resilient earnings growth, driven by diversified revenue streams across solar, earthing & lightning protection, and switchgear divisions.
- Strong orderbook visibility with major wins from Tenaga Nasional Berhad, supporting robust growth into 2026.
- Rising dividend prospects and commitment to capital management.
- Potential for further upside if the company secures utility-scale concessions, building a recurring income base.
- Valuation remains attractive at 19x 2026F PE, with a fair value target of RM2.00 per share.
- ESG initiatives and board diversity reinforce Pekat’s long-term sustainability profile.
Conclusion: Pekat Group Positioned for Sustainable, High-Quality Growth
Pekat Group Berhad continues to deliver strong results, leverage structural growth trends in renewable energy and power distribution, and enhance shareholder value through disciplined capital management. With robust orderbook momentum, expanding capabilities, and a clear commitment to ESG, Pekat is well-positioned for further upside in the evolving energy landscape. Investors seeking exposure to Malaysia’s renewable energy and infrastructure boom should keep a close eye on Pekat Group’s progress.
