PEKAT: Strong Performance Driven by Segmental Growth and Cost Efficiencies
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Leading market participants are observing a robust financial performance, with core earnings significantly exceeding expectations. The strong results were primarily fueled by substantial revenue growth across all key segments and effective cost management.
Performance Highlights
The company’s core earnings for 2025 surged by an impressive 143% year-on-year, reaching RM47 million. This performance considerably surpassed internal projections, accounting for 104% of the investment bank’s estimates and 98% of consensus full-year forecasts. Revenue also saw a remarkable increase of 113% year-on-year, totaling RM610 million, demonstrating broad-based strength.
Drivers of Growth
This exceptional growth was underpinned by stronger performance across all business segments, with solar PV contributing a 97% increase, earth and light protection (ELP) expanding by 42%, and the power distribution business (PDE) growing by over 100%. A favourable revenue mix, particularly from the higher-margin ELP and PDE segments, led to an improvement in the EBITDA margin by 1.1 percentage points, reaching 13.7%. Despite an easing of the 4Q25 EBITDA margin by 1.1 percentage points due to a higher revenue mix from the lower-margin solar PV segment during the quarter, the overall trend points to strong operational efficiency.
Future Outlook and Risks
The outlook remains positive, with expectations for increasing contributions from the ELP and PDE segments to drive stronger earnings growth in 2026. The investment bank has consequently raised its 2026-27E earnings per share (EPS) forecasts by 7-12%, incorporating earnings from a new 21-year Power Purchase Agreement (PPA) contributing RM4 million in PATAMI (Profit After Tax and Minority Interests) and higher replenishment assumptions of RM600 million and RM750 million for 2026-27E, respectively. A 2028E EPS forecast of 10.4 sen, representing a 12% year-on-year increase, has also been introduced. The synergistic business model and leading market position in the ELP segment are expected to benefit from Malaysia’s Renewable Energy initiatives, sustained data centre investments, and TNB’s capital expenditure expansion. However, key downside risks include potential government RE policy changes, project execution delays, intense market competition, and volatility in solar PV panel prices.
