KUALA LUMPUR (October 4): UOB Kay Hian said Pekka Group Bhd has continued to support the growth of Malaysia’s automotive industry, supported by an increase in total industry production (up 12% year-to-date) and a healthy order backlog. He said he is ready to benefit from the
The research firm said in a note Wednesday that while it does not rate Pecca, its original equipment manufacturing (OEM) segment accounts for 86% of Pecca’s total revenue, with the remaining 14% coming from pre-delivery inspection and replacement equipment manufacturers. (REM) Market.
He said the company’s brand range has been diversified to mass market customers, including both domestic and non-national brands such as Perodua, Proton, Toyota, Nissan and Mitsubishi.
“The positive momentum reflected in increased vehicle sales despite the lack of excise and service tax exemptions, combined with increased penetration of mass market customers, means Pekka has a healthy factory utilization rate of 85%. We believe we will continue to benefit from improved demand, which has increased to 90% and is well positioned to meet demand.
“Other prospects look promising, supported by its strategic initiatives and plans: i) completed the acquisition of PT Gemilang Maju Kencana (GMK) in May to expand its presence in the Indonesian market; ii) ) Expansion plans for the OEM segment covering entry-level, mid-level and luxury brands. iii) Drive the growth of REM business across Malaysia and in other countries around the world including Europe, US, Australia, New Zealand, Dubai and Singapore. iv) Capturing new opportunities including Tier 1 manufacturers and the electric vehicle market.
“While the Malaysian market currently accounts for more than 90% of Pekka’s overall existing sales, Indonesia has significant growth potential leveraging GMK’s extensive partnerships and population numbers to influence vehicle demand.” said the company.
As at 11:45am on Wednesday, Pekka fell 0.83% or 1 sen to RM1.19 with 3.83 million shares traded.
