Company Coverage
Pekat Group (PEKAT MK): Riding The CRESS Wave Into The Next Growth Chapter
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM2.93
RM3.60
+23.0%
RM2.30
Analyst
Analyst
Highlights
- A 150MW CRESS win is highly probably by Dec 26, as we believe Pekat can capture blue-sky 2GW of CRESS projects over the next three years.
- Against this backdrop, we lift 2028 net profit by 25%, as we expect orderbook to rise from RM780m currently to RM2b by 2028.
- We continue to like Pekat. Maintain BUY with a higher SOTP-based fair value of RM3.60/share, assuming 500MW CRESS wins. Blue-sky fair value of RM6.30/share pencils in 2GW of CRESS assets.
Analysis
- CRESS beneficiary; lift 2028 net profit by 25%. We believe Pekat Group (Pekat) is well positioned to benefit from a blue-sky 2GW of Corporate Renewable Energy Supply Scheme (CRESS) wins in the next three years. We expect Pekat to capture majority earnings of the engineering, procurement, construction, and commissioning (EPCC) while taking a minority or associate stake in the CRESS asset. A 150MW CRESS win is highly probable by Dec 26. This is supported by strategic landbank. To recap, Pekat recently announced that it has secured a 24-year lease over a 470-acre site in Sungai Petani, Kedah. Based on this size, there is potential to host a 150MWac/200MWp solar-plus-BESS project on the site.
- Earnings to double in 2028. We are pencilling in 500MW of CRESS and LSS6 contract win by 2029, lifting orderbook from the current RM780m to RM2.2b. Against the backdrop of heightened solar EPCC opportunities (CRESS/ LSS6), we raise 2027 and 2028 net profit forecasts by 14% and 25% respectively. We now project a three-year earnings CAGR of 29% (2026-28). We believe Pekat may be able to secure strategic landbank and stay ahead of the curve, potentially accommodating up to 2GW of CRESS/LSS6 potential.
- Fair value of RM3.60; blue-sky RM6.30. In tandem with the increase in earnings, we raised our fair value to RM3.60/share. We transition from PER to SOTP valuation to capture the intrinsic value of CRESS power assets. Our SOTP captures: a) a RM2.70/share for RE EPCC orderbook; and b) a RM0.90/share for long-term CRESS power assets. We assume Pekat can win 500MW CRESS contracts in the near term. Our blue-sky fair value for Pekat is RM6.30/share, assuming 2GW of power generation assets. See our fair value analysis overleaf.
Highlights
- A 150MW CRESS win is highly probably by Dec 26, as we believe Pekat can capture blue-sky 2GW of CRESS projects over the next three years.
- Against this backdrop, we lift 2028 net profit by 25%, as we expect orderbook to rise from RM780m currently to RM2b by 2028.
- We continue to like Pekat. Maintain BUY with a higher SOTP-based fair value of RM3.60/share, assuming 500MW CRESS wins. Blue-sky fair value of RM6.30/share pencils in 2GW of CRESS assets.
Analysis
- CRESS beneficiary; lift 2028 net profit by 25%. We believe Pekat Group (Pekat) is well positioned to benefit from a blue-sky 2GW of Corporate Renewable Energy Supply Scheme (CRESS) wins in the next three years. We expect Pekat to capture majority earnings of the engineering, procurement, construction, and commissioning (EPCC) while taking a minority or associate stake in the CRESS asset. A 150MW CRESS win is highly probable by Dec 26. This is supported by strategic landbank. To recap, Pekat recently announced that it has secured a 24-year lease over a 470-acre site in Sungai Petani, Kedah. Based on this size, there is potential to host a 150MWac/200MWp solar-plus-BESS project on the site.
- Earnings to double in 2028. We are pencilling in 500MW of CRESS and LSS6 contract win by 2029, lifting orderbook from the current RM780m to RM2.2b. Against the backdrop of heightened solar EPCC opportunities (CRESS/ LSS6), we raise 2027 and 2028 net profit forecasts by 14% and 25% respectively. We now project a three-year earnings CAGR of 29% (2026-28). We believe Pekat may be able to secure strategic landbank and stay ahead of the curve, potentially accommodating up to 2GW of CRESS/LSS6 potential.
- Fair value of RM3.60; blue-sky RM6.30. In tandem with the increase in earnings, we raised our fair value to RM3.60/share. We transition from PER to SOTP valuation to capture the intrinsic value of CRESS power assets. Our SOTP captures: a) a RM2.70/share for RE EPCC orderbook; and b) a RM0.90/share for long-term CRESS power assets. We assume Pekat can win 500MW CRESS contracts in the near term. Our blue-sky fair value for Pekat is RM6.30/share, assuming 2GW of power generation assets. See our fair value analysis overleaf.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM2.93
RM3.60
+23.0%
RM2.30
Analyst
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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