Pekat Group Bhd - Contract Expansion
Fri, 05-Jun-2026 07:36 am
by Research Team • Apex Research

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PEKAT (0233)

Target Price (RM)

1.88

Recommendation

Buy

  • PEKAT expanded its Johor LSS project, increasing capacity from 63MWac to 135MWac (+72MWac) and raising the contract value by RM100.9m (+118%) to RM186.5m.

  • Assuming an 8% PBT margin, the additional contract value could contribute c.RM8.1m in project-level PBT, equivalent to 9% of our FY26F PBT forecast.

  • Following the contract expansion, PEKAT's outstanding order book is estimated to increase to c.RM861m (from RM760m), implying a 1.4x book-to-bill ratio based on FY25 revenue.

  • Maintain BUY with an unchanged TP of RM1.88 based on our SOP valuation methodology.

Expanded Johor LSS Contract to RM186.5m. PEKAT announced that its indirect wholly-owned subsidiary, Pekat Solar Sdn Bhd, has entered into supplemental agreements with the main contractor for its ongoing large-scale solar (LSS) project in Kulai, Johor. Following the variation works, the project's capacity has been increased from 63MWac to 135MWac (+72MWac). Consequently, the contract value has been revised upward to RM186.54m from RM85.68m previously, representing an increase of RM100.9m (+118%). The additional works relate to Phase 2 of the existing project and are expected to be completed within approximately four months.

 

Our View. We view the supplemental agreement positively as the additional RM100.9m contract value is expected to further strengthen PEKAT's earnings visibility and outstanding order book over the medium term. Assuming an 8% PBT margin, the additional works could contribute approximately RM8.1m in project-level PBT, equivalent to about 9% of our FY26F PBT forecast. We believe execution risk remains manageable given that the project is already under execution, reducing uncertainties typically associated with newly secured contracts. The contract expansion also reflects continued client confidence in PEKAT's project delivery capabilities and reinforces the Group's position within Malaysia's utility-scale solar segment.

 

Outlook. We remain positive on PEKAT's outlook as the contract expansion is expected to further strengthen earnings visibility over the medium term. Following the additional RM100.9m contract value, the Group's outstanding order book is estimated to increase to approximately RM861.0m from RM760.1m as at 31 March 2026, equivalent to a book-to-bill ratio of 1.4x based on FY25 revenue. We believe the enlarged order book, coupled with continued opportunities across utility-scale solar, commercial & industrial (C&I) solar, ELP and EPE Switchgear segments, should continue to underpin earnings visibility and support future order book replenishment.

 

Earnings revision. We make no changes to our earnings forecast as the award falls within our orderbook replenishment assumption of RM350m for FY26.

 

Valuation & Recommendation. We maintain our BUY recommendation on PEKAT with an unchanged TP of RM1.88. 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. 

 

Risks. Project execution delays, margin compression from rising material costs, and slower-than-expected contract wins.

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