PEKAT has proposed a private placement of up to 66.2m new shares, representing 10% of its existing share base. At an indicative issue price of RM1.28 per share, the placement is expected to raise gross proceeds of RM84.7m.
The rationale of this placement is to fund the Group’s ongoing and future expansion in the solar segment particularly in C&I, utility-scale, and CGPP projects.
We are mildly Positive on the news as the Group’s proactive approach in securing growth capital reflects management’s confidence in project pipeline and underscores constructive outlook for the solar segment. That said, the placement is expected to dilute our EPS forecast by 11%, implying a fair value of RM1.71 on a fully diluted basis.
Maintain a BUY rating with an uncharged target price of RM1.87, based on a sum-of-parts (SOP) valuation, and appraised with a three-star ESG rating.
Proposed Placement. PEKAT has proposed a private placement of up to 66.2m new shares, representing 10% of its enlarged share capital under the maximum scenario, inclusive of all the ESOS shares exercised. Under the minimum scenario, where no ESOS options are exercised, the placement would involve up to 64.5m new shares. The issue price will be determined later, at a discount of no more than 10% to the 5-day VWAP prior to price fixing. The placement is expected to be completed in 3QCY25.
Based on an indicative issue price of RM1.28/share. Under the maximum scenario, the proposed placement is expected to raise up toRM84.7m. Of this, more than 70% is earmarked for CAPEX on solar projects, comprising RM30.0m (35%) for C&I projects, RM25.0m (30%) for utility-scale projects, and RM10.0m (12%) for CGPP projects. Additionally, RM19.5m (23%) will be allocated for the repayment of bank borrowings (see Table 1 for breakdown). The rationale for the private placement is to expand business operations in the solar segments without excessive strain on PEKAT's financial resources. This is expected to marginally improve PEKAT’s gearing ratio from 0.67x as of 11 July 2025 to 0.33x.
Table 1: Details of Utilisation under Maximum Scenario
| Purposes | RM'mn | % |
| CAPEX for C&I solar projects | 30.0 | 35.4 |
| CAPEX for utility-scale projects | 25.0 | 29.5 |
| CAPEX for CGPP projects | 10.0 | 11.8 |
| Repayment of bank borrowings | 19.5 | 23.0 |
| Estimated expenses in relation to the proposed placement | 0.2 | 0.2 |
| Total | 84.7 |
Source: Company, Apex Securities
Table 2: Pro Forma Effects of the Proposed Private Placement
As of 11 July 2025 (LPD) | After the proposed placement | |
RM'm | RM'm | |
| Share capital | 93.5 | 202.9 |
| Share option reserve | 1.0 | 0.0 |
| Merger reserve | -50.1 | -50.1 |
| Foreign currency translation reserve | 0.0 | 0.0 |
| Retained earnings | 115.2 | 109.7 |
| Shareholder's equity | 159.6 | 262.6 |
| ||
| Number of PEKAT Shares ('000) | 645 | 727.7 |
| NA per PEKAT Share (RM) | 0.25 | 0.36 |
| Total borrowings (RM’000) | 106.5 | 87.0 |
| Gearing (times) | 0.67 | 0.33 |
Source: Company, Apex Securities
Our Take. We are mildly Positive on the proposed placement. While the issuance will improve PEKAT’s financial position by paring down its debt, it will also result in an estimated 11% dilution to our forecasted FY25F EPS under the maximum scenario, implying a fair value of RM1.71 on a fully diluted basis. That said, PEKAT’s proactive approach in securing growth capital reflects management’s confidence in project pipeline and underscores constructive outlook for the solar segment.
Earnings revision. Maintained pending the determination of issue price and the completion of the exercise.
Valuation & Recommendation. We maintain our BUY rating with an unchanged TP of RM1.87, based on a SOP valuation and assigned a three-star ESG rating. We remain in favour of PEKAT for its synergistic business model, strong margins in the EPE division, and sustainable order book. Noted that PEKAT’s strong historical financial results qualify the Group for the transfer to the Main Board of Bursa Malaysia.
Risks. Heavy reliance on government initiatives. Inability to secure new contracts. Spike in raw material costs such as copper and steel.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.212042 | 4.248408 |
| EUR | 4.921000 | 4.929487 |
| CNY | 0.591903 | 0.592919 |
| HKD | 0.540309 | 0.544492 |
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