KUALA LUMPUR: Pecca Bhd's OEM segment is expected to grow its contribution following the newly launched Perodua Aruz and continued demand for other key Perodua models.
"At 12x CY19E PER/ yield of 5%, Pecca’s valuations look attractive to us," said Affin Hwang Capital research.
It affirmed its buy call on Pecca with an unchanged target price of RM1.14.
In addition, Affin Hwang said it expected the 2019 Vios, for which Pecca has bagged the contract, to be a high volume product and could surprise in 2H2019.
Furthermore, strong demand for Perodua's leather seat covers should more than offset the flattish contribution from the PDI and REM segments in 2HFY19.
In 2QFY18, Pecca's Ebidta margins jumped 6.6ppt to 23.5% on higher average selling price and better production yields.
However, Affin Hwang believes Pecca's Ebidta margins would likely normalise in 2HFY19 given the higher cost environment and lower margin sales mix.
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