Pekat Group Berhad (Bursa: 0233)(柏卡集团有限公司) has ventured into the power distribution equipment business, which encompasses the design and fabrication of power distribution equipment and related activities for the power industry.
The Company’s wholly owned subsidiary Pekat Teknologi Sdn Bhd (“Pekat Teknologi”) had today completed the RM96.0 million acquisition of 60% stake in Apex Power Industry Sdn Bhd (“Apex Power”).
Apex Power and its wholly owned unit EPE Switchgear Sdn Bhd are among Malaysia’s largest manufacturers of medium voltage electrical switchgears, and are also involved in manufacturing, engineering and project activities within the power sector.
Its products are sold to foreign countries in various regions including Asia Pacific, Middle East and Europe such as Qatar, Sri Lanka, Oman, Australia and Germany.
Mr Tai Yee Chee (戴于智), Chief Executive Officer of Pekat, said this strategic move positions Pekat in a well-established sector, offering steady growth and solid returns. By adding this robust new pillar, Pekat reinforces its path to sustainable and enduring profitability, with the power distribution segment projected to contribute 25% or more to the Group’s future earnings.
“Pekat will leverage on Apex Power Group’s track record in the Power Distribution Equipment Business segment and foreign markets presence to expand and complement the Group’s existing businesses and market position.
“This is expected to be achieved via the integration of power distribution equipment marketed under the “EPE” brand into the Pekat’s products and services, thereby allowing cross-selling of the Group’s ELP products to EPE Switchgear’s customer base, as well as the inclusion of EPE Switchgear’s power distribution equipment for the Group’s solar projects,” he added.
Accordingly, this would facilitate Pekat to tender and/or secure new contracts or customers, as well as potentially venturing into new foreign markets by offering a more comprehensive range of products and services.
“The Power Distribution Equipment Business segment is expected to increase and diversify the Group’s earnings based on the aggregated profit guarantee from Apex Power of not less than RM48 million for the combined periods in the financial year ending Sept 30, 2024 (FY2024) to FY2026. Therefore, we expects the new business segment to contribute 25% or more of the net profits of the Group in the future,” Mr Tai further added.
The power distribution equipment industry in Malaysia is largely driven by infrastructure development to service user industries. This includes the construction of substations and distribution networks, which directly create demand for switchgears as they are commonly used in power generation, transmission, and distribution systems.
The factors driving the development of infrastructure within the power distribution industry include, amongst others, growing adoption of renewable energy sources requiring integration with the existing grid structure, maintenance and upgrade of power distribution system to improve efficiency and reliability, increasing electric demand and expansion of data centres, as well as the rise of electric vehicles.
Pekat Teknologi had on 1 August 2024 entered into a share sale agreement with Apex Power for the acquisition of 75,000 shares, representing 60% equity interest in Apex Power for RM96 million cash.
For the nine months ended 30 September 2024 (“9MFY2024”), Pekat’s revenue increased 16.4% to RM196.84 million from RM169.17 million, driven by growth across solar PV, ELP and trading segments.
The Company’s 9MFY2024 net profit rose significantly by 43.9% year-on-year, while net profit margins improved by 1.43 percentage point. This exceptional quarter propelled Pekat’s 9MFY2024 PAT to RM14.74 million, exceeding FY2023’s full-year bottom line of RM13.75 million.
