Pekat Group Berhad - Secures RM85.7m Solar EPC Contract
Fri, 03-Oct-2025 07:52 am
by Tan Sue Wen • Apex Research

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PEKAT (0233)

Target Price (RM)

1.720

Recommendation

Hold

 

  • PEKAT secured an RM85.7m solar EPC contract for a 63MWac LSS facility in Kulai, Johor. The project carries an eight-month timeline, with targeted completion by 31 May 2026. 

  • The contract value is lower than typical benchmarks given the exclusion of civil and substation works.

  • Assuming a PBT margin of 8%, the contract could contribute PBT of RM6.9m in total, representing 4.5% of our forecasted PBT for FY25.

  • We view this positively, as it supports earnings growth through FY26F. 

  • Maintain a HOLD rating with an unchanged target price of RM1.72, based on SOP valuation, and appraised with a three-star ESG rating.

 

Secures RM85.7m Solar EPC Contract. Pekat, via its indirect wholly-owned subsidiary Pekat Solar Sdn Bhd, has secured an RM85.7m engineering, procurement, and construction (EPC) contract with a Malaysian main contractor for the design, supply, installation, testing, and commissioning of a 63MWac large-scale solar photovoltaic (LSS) facility in Kulai, Johor. The project falls under the SELCO programme, with a duration of eight months and is scheduled for completion by 31 May 2026.

 

Our Take. We view this as a positive development for PEKAT, as it supports the Group’s earnings growth through FY26F. The contract value appears lower than typical utility-scale benchmarks because it covers only solar EPC and 33kV interconnection works, excluding civil and substation components. Assuming a PBT margin of 8%, the contract could contribute PBT of RM6.9m in total, representing 4.5% of our forecasted PBT for FY25. With this win, PEKAT’s unbilled order book has risen to RM750.7m, equivalent to 2.6x FY24 revenue, providing solid earnings visibility through FY27F.

 

Outlook. We maintain a Neutral stance on the outlook for rooftop solar. While the government recently rolled out the Solar ATAP scheme to replace NEM, we view the framework as less attractive given the absence of capacity charge incentives, implying a longer payback period and could dampen adoption momentum. In the near term, order replenishment is expected to be driven by front-loaded demand under the SELCO programme, as developers seek to complete projects ahead of the mandatory battery requirement that will apply to systems commissioned after December 2025. Meanwhile, solar module prices have inched up to USD0.10/W (from USD0.09/W trough), which remains a key risk to monitor.

 

Earnings revision. No changes to our earnings forecasts, as the contract win falls within our FY25F order book replenishment assumption of RM220m.

 

Valuation & Recommendation. We maintain HOLD with an unchanged TP of RM1.72, based on SOP valuation and supported by an assigned three-star ESG rating. Note that our TP has yet to factor in the recent private placement, which would lower fair value to RM1.52 based on forecasted FY26F EPS under the maximum scenario. PEKAT’s strong historical financial results qualify the Group for a transfer to the Main Market 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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