Pekat Eyes Up to 70% Revenue Contribution From Solar PV Division

KUALA LUMPUR : Pekat Group Bhd, en route to be listed on Bursa Malaysia’s ACE Market on June 23, expects to grow its solar photovoltaic (PV) division’s contribution to the group’s revenue to between 60% and 70% in the current financial year ending Dec 31, 2021 (FY21).

The division’s contribution to the group’s total revenue has been growing substantially in the past financial years. The segment accounted for 57.4% of the group’s total revenue in FY20, growing from 20.5% in FY17, 45.6% in FY18 and 49.2% in FY19.

(From left) Top row: Pekat executive director Wee Chek Aik, Pekat MD Chin Soo Mau, Pekat executive director Tai Yee Chee; second row: M&A Securities MD of corporate finance Datuk Bill Tan, Hextar group CEO Datuk Eddie Ong, M&A Securities head of corporate finance Gary Ting; third row: Pekat chairman Kok Kong Chin (Photo by Pekat)

Pekat managing director Chin Soo Mau said government-driven initiatives such as large scale solar programmes and net energy metering programmes (NEM) – to encourage the installation of solar PV panels – has bolstered the demand for solar energy.

“About two-thirds of our orderbook is from the solar PV division, which would provide a steady revenue stream for the group,” Chin said, adding that the group’s orderbook comprised unbilled contracts amounting to RM154.9 million for both the solar PV, and the earthing and lightning protection divisions as at May 3.

Also, it has a total purchase order of RM12.4 million for its trading division, which is involved with the distribution of electrical products and accessories.

Chin said Pekat would tap into the RM1 billion local solar market with potential jobs this year, driven mainly from the NEM 3.0 programme.

“So far, we have secured over 22 megawatt (mw) under the net offset virtual aggregation (NOVA) programme for commercial premises under NEM 3.0, and we are applying for more, as we aim to achieve 10% share from the total 300 mw quota allocated for commercial premises,” he said.

Under the NEM 3.0, which offers a quota of 500 mw from 2021 to 2023, Pekat aims to encourage the growth of renewable energy.

According to him, the local solar energy market size is growing at about 10% annually, as the adoption for solar energy is faster now compared to the past, buoyed by a decline in the cost to deploy over the years.

“We anticipate that the solar industry will grow rapidly in the near future; to capture more markets, we need to prepare for ourselves. Hence, we need to tap into the equity market,” Chin told The Edge after its the launch of Pekat’s initial public offer (IPO) prospectus today.

Chin said the group is aiming to grab up to 15% of the market share in the solar industry in Malaysia in the next three years, up from 8% to 10% currently.

Apart from providing design, supply and installation of solar PV systems and power plants, Pekat also supplies and installs earthing and lightning protection (ELP) systems. Other business activities include distribution of electrical products and accessories under the trading division.

Pekat is seeking to raise up to RM44.4 million in proceeds from its upcoming IPO, which entails the issuance of 138.67 million new shares at an issue price of 32 sen each. Based on the enlarged share capital of 645 million shares, Pekat is expected to have a market capitalisation of RM206.4 million.

The group plans to utilise RM18 million from the proceeds for the construction of a new head office and operations, as it expands to capitalise on the growth of the solar PV industry.

Pekat will allocate RM12.7 million for working capital, namely purchase of materials for projects such as solar PV modules, solar PV inverters and ELP products and accessories, while RM10 million will go towards repayment of borrowings and the remainder RM3.7 million to defray listing expenses.

The group said 32.2 million new shares will be made available to the Malaysian public via balloting, 16.1 million new shares for its eligible directors and employees, as well as persons who have contributed to the success of Pekat, while the remaining 90.3 million new shares (14%) will be placed out to selected Bumiputera investors approved by Ministry of International Trade and Industry Malaysia and selected investors.

Pekat recorded a 19.9% revenue compounded annual growth rate or CAGR (gowing from RM72.8 million in FY17 to RM125.6 million in FY20), and a 12.8% CAGR for its profit after tax (growing from 9.4 million to RM13.6 million).

Source: theedgemarkets