Earnings boost for Pecca from Rentas Health stake

Pecca Group's diversification into medical equipment will help provide additional revenue streams for the automotive leather seat interior manufacturer.

KUALA LUMPUR: Pecca Group Bhd is expected to get an earnings boost of more than 30% for its financial year ending June 30, 2022, following its acquisition of Rentas Health Sdn Bhd for RM100mil.

Analysts said Pecca’s diversification into medical equipment will help provide additional revenue streams for the automotive leather seat interior manufacturer.

TA Securities said its back-of-the-envelope calculation reveals that the acquisition may increase Pecca’s 2022 earnings by 34.3% with a profit guarantee of RM23mil, after considering the increase in interest cost for the acquisition.

“While the acquisition will help to enable Pecca to extend its product range and provide an additional revenue stream to the group, the profit guarantee of merely one year and no proven operating track record (commenced on March 20, 2020) from the company may expose Pecca to some business risks,” it said in a report yesterday.