PECCA Group Bhd, which makes leather upholstery for cars and aircraft, plans to raise up to RM67.87mil from the issuance of 47.79 million new shares.
KUALA LUMPUR: Pecca Group Bhd
’s entry into the aviation industry will be a potential game changer for the company, said Maybank Investment Bank (IB) Research.
The research house reiterated its Buy call on the car leather upholstery maker on Friday, with a higher target price of RM2.18.
“Pecca’s entry into the aviation industry, where barriers to entry are high, is a testament of its capabilities,” it said.
It said the group’s securing of the aircraft part refurbishment license from the Department of Civil Aviation (DCA) in March 2016, followed by the leather upholstery scope secured by Pecca’s 60%-owned Pecca Leather Aviation Services (PAviation) will enhance its ability and opportunities in AirAsia’s aircraft part localisation initiative for its existing and new aircrafts.
With over 200 existing aircrafts under the AirAsia Group, AirAsia’s collaboration with Mirus Aircraft Seating to replace existing and supply new aircraft seats offers a potential job
value of RM108mil to RM144mil (assuming 180 seats per plane, and RM3,000 to RM4,000 per seat).
Maybank IB Research noted that Pecca was the first local-breed company to secure a specific leather upholstery scope license for the aviation industry from DCA.
“Opportunities in the aviation industry coupled with sustained momentum in its Perodua exposure are key drivers for earnings growth.
“Our earnings estimates, which have yet to incorporate any contribution from the aviation industry, are unchanged for now pending job wins,” it said.
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