Pekat Group Berhad - Johor Bahru ELP contract expanded to RM57.2m
Tue, 08-Sep-2026 08:04 am
by Research Team • Apex Research

Counter

PEKAT (0233)

Target Price (RM)

1.88

Recommendation

Buy

  • PELP now holds three ELP subcontracts on the same Johor Bahru project: RM27.2m (executed 6 July 2026), RM4.6m (3 August 2026) and RM25.3m (7 September 2026), totalling RM57.2m.

  • This is a scope expansion, not a new win: the RM27.2m subcontract was announced on 8 July 2026 and is already in our numbers, so only the RM4.6m and RM25.3m subcontracts (RM30.0m) are incremental.

  • The RM4.6m and RM25.3m subcontracts are scheduled for completion by February 2027 and the RM27.2m by September 2027, contributing from FY26F.

  • FY26 YTD ELP wins of RM76.9m already exceed our previous FY26F replenishment assumption of RM75m, which we raise to RM80m.

  • Maintain our BUY rating with an unchanged TP of RM1.88, pending a management meeting to further understand the Group's prospects and guidance.

 

Johor Bahru ELP scope expands to RM57.2m. Pekat, via its indirect wholly-owned subsidiary Pekat E & LP Sdn Bhd (PELP), has executed three subcontract agreements with an undisclosed Malaysian main contractor for the design, supply, installation and testing of earthing and lightning protection (ELP) systems and associated works for a project in Johor Bahru. The subcontracts were executed on 6 July, 3 August and 7 September 2026, with accepted amounts of RM27.2m, RM4.6m and RM25.3m, totalling RM57.2m. 

 

Our Take.We view this award positively, despite being an expansion of an existing job rather than a new win. The RM27.2m first subcontract was already announced on 8 July 2026 and sits in our numbers, so the filing adds an additional RM30.0m of order intake. Including the earlier ELP awards secured during FY26, PELP's cumulative FY26 YTD ELP wins now stand at RM76.9m, exceeding our previous FY26F replenishment assumption of RM75m. Scope on the third subcontract extends beyond the ELP package to earth mat installation, associated cabling and the related civil works, which is wider than PELP's standard scope. The Johor Bahru location and the nature of the works are consistent with the data centre build-out that has driven PELP's order flow this year.

 

Outlook. Order momentum now sits with ELP and EPE rather than solar. ELP has secured RM76.9m of wins YTD, drawn from data centre and substation work concentrated in Johor, and the widened scope on this project (earth mat and associated civil works alongside the ELP package) points to larger average contract sizes. EPE's TNB switchgear work remains the other driver, which we value at 17x FY27F earnings. Both segments are geared to data centre and grid capex, which we expect to hold through FY27F as data center demand remains strong in Malaysia.

 

Earnings revision. With this latest contract award, FY26 YTD ELP wins have exceeded our previous full-year replenishment assumption of RM75m, with nearly four months of the financial year still to run. We therefore raise the FY26F assumption to RM80m, Core net profit upward by 0.8%/1.3%/1.1% to RM51.8m/RM64m/RM71.5m for FY26F/FY27F/FY28F respectively.

 

Valuation & Recommendation. We maintain our BUY rating with an unchanged TP of RM1.88, despite the stock’s upside narrowing to below 10%, pending our meeting with management. We will reassess our forecasts and recommendation thereafter.

 

Risks. Execution and cost risks on construction works, delays and defects, inability to secure new contracts, and slower data centre build-out in Johor or deferral of TNB medium-voltage tenders.

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