Pekat lands another TNB contract, retains 'Buy' with higher target price of RM1.57
In a research note released today, Phillip Securities said it continued to like Pekat for its synergistic businesses that are set to benefit from Malaysia's RE initiatives.
EPE Switchgear (M) Sdn Bhd, an indirect 60%-owned subsidiary of the company, had on May 15 received a letter of award dated May 9 May from Tenaga Nasional Bhd (TNB) for a tender submitted in relation to the supply, installation, testing, and commissioning of 33 kilovolt (kV) gas insulated switchgear & 11kV GIS and additional equipment for TNB's distribution network.
The two-year period contract is priced at RM135.24 million, inclusive of sales and service tax, Pekat said in an exchange filing on Friday.
Phillip Securities noted that this was the second long-term contract secured by EPE Switchgear in 2025, bringing year-to-date (YTD) new contract wins to RM232.5 million, well on track to meet its full-year replenishment assumption of RM240 million.
Based on EPE Switchgear's historical net profit margin of 10–12%, it estimated that the contract would contribute RM14 million to 16 million net profit (PAT) over 2025-27E.
It said the contract also suggested potential upside to EPE Switchgear's RM16 million annual profit guarantee.
The Kota Damansara, Selangor based company is a solar photovoltaic (PV) supplier as well as earth termination and surge protection systems. –TMR
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