PEKAT’s 1QFY26 CNP of RM11.9m (+17.7% QoQ, +5.5% YoY) came in broadly within expectations, accounting for 21% of both our and consensus full-year estimates.
Earnings were mainly supported by continued progress billings from ongoing solar EPCC projects, alongside stronger contributions from the power and trading segments.
We revised our FY26–28F earnings forecasts to RM53.06m/RM63.99m/RM70.71m following updated orderbook assumptions.
PEKAT remains well-positioned to benefit from LSS6/CRESS opportunities and rising data centre-related infrastructure demand.
We maintain BUY and raise our TP to RM1.88 (from RM1.59), based on an SOP valuation methodology.
Broadly Inline. After adjustingfor EIs (+RM0.51m). PEKAT reported a 1QFY26 core net profit (CNP) of RM11.9m (+17.7% QoQ, +5.5% YoY). The results were in line, accounting for 21% of both our and consensus estimates. Earnings growth was primarily supported by continued progress billings from ongoing solar EPCC projects, alongside stronger contributions from the power and trading segments.
QoQ. Revenue declined by (12.1% QoQ) to RM167.9m, mainly dragged by weaker contribution from the EPCC and ELP segments, which fell by 11.1% and 21.7% respectively due to slower project execution and lower order fulfilment during the quarter. Meanwhile, trading revenue remained relatively stable, increasing marginally by (1.2% QoQ). Despite the lower revenue base, core net profit rose (17.7% QoQ) to RM11.9m, supported by improved cost management and the absence of inventory write-downs recognised in the preceding quarter. Consequently, core PATMI margin improved to 7.1% from 5.3% in 4QFY25.
YoY: Revenue in 1QFY26 increased 11.7% to RM167.9m, mainly driven by stronger contribution from the solar EPCC segment, which rose 11.4% YoY to RM103.4m on the back of progress recognition from ongoing large-scale solar projects. In addition, the power division and trading segment recorded solid growth of 17.7% and 21.8% YoY respectively. Despite the higher revenue, core net profit increased at a slower pace of 5.5% YoY to RM11.9m, as margins were affected by unrealised foreign exchange losses and increased finance costs arising from borrowings utilised for ongoing solar asset development and acquisition financing. Consequently, core PATMI margin eased slightly to 7.1% from 7.5% in 1QFY25.
Outlook. We remain constructive on PEKAT’s outlook, supported by its healthy outstanding orderbook of RM754m (1.2x 2025 revenue) and ongoing replenishment efforts via upcoming LSS and CRESS-related opportunities. We believe the Group remains well-positioned to benefit from Malaysia’s accelerating renewable energy expansion and rising corporate renewable energy adoption trends. Meanwhile, management highlighted that the Group has secured approximately RM191m worth of data centre-related contracts primarily under its E&LP segment, which is increasingly emerging as a meaningful earnings contributor amid strong data centre investment activity in Malaysia. We view this positively as it further diversifies PEKAT’s earnings base beyond its core solar EPCC operations. Additionally, we are encouraged by management’s continued focus on expanding its recurring income base through selective solar asset ownership and long-term energy-related investments, including recent solar asset and BESS-related initiatives. Nevertheless, we take comfort in management’s disciplined bidding approach and continued focus on preserving earnings quality amid intensifying industry competition.
Earnings revision. We revised our FY26-28F core net profit forecasts to RM53.06m/RM63.99m/RM70.71m respectively, following a change in analyst by increasing our orderbook assumptions. We continue to expect steady earnings growth, supported by sustained solar EPCC activities under the LSS and CRESS frameworks, alongside rising demand for integrated renewable energy and power infrastructure solutions amid Malaysia’s ongoing energy transition.
Valuation & Recommendation. we maintain BUY and raise our TP to RM1.88 (from RM1.59). Our valuation is derived from an SOP approach: 30x FY27F P/E for the high-growth solar EPCC segment and 15x FY27F P/E for the ELP and Trading segments. We continue to favour PEKAT for its integrated exposure across solar EPCC, power engineering and electrical infrastructure solutions, positioning the Group to benefit from rising renewable energy adoption, CRESS opportunities and growing electricity demand from industrial and data centre developments.
Risks. Delays in renewable energy project rollouts, inability to replenish orderbook, intensifying competition within the solar EPCC space and higher financing costs arising from asset expansion initiatives.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.949723 | 3.981539 |
| EUR | 4.614340 | 4.619218 |
| CNY | 0.585739 | 0.586367 |
| HKD | 0.504357 | 0.507919 |
| SGD | 3.092670 | 3.114543 |