PETALING JAYA: Pecca Group Bhd is looking to expand its reach within the automotive industry by moving into a new area – the electric vehicle (EV) segment.
The company, which is currently one of the largest automotive leather upholstery players for Malaysia’s original equipment manufacturer (OEM) and pre-delivery inspection (PDI) passenger vehicle segments, recently signed a memorandum of understanding with Malaysia Automotive Robotics and IoT Institute (MARii) to collaborate on EV parts and technology.
Group managing director Datuk Teoh Hwa Cheng (pic) said a definite agreement on this would be signed in due time.
“Meanwhile, the company has already started talking to some auto companies involved in EV, and they have expressed their intentions to work with Pecca,” he told StarBiz.
According to him, the collaboration with MARii is helping to fast-track the company’s EV goals.
Although nothing has been firmed up, Teoh said the company expects to produce for the EV companies, leather upholstery, for a start.
This could eventually be expanded to include other types of parts, he said.
Teoh also noted that the government’s various incentives for EVs recently announced in Budget 2022 will help boost the take-up rate of EVs in the country in time to come.
While income generation from any EV-related business will only come at a later stage, Teoh said he was confident that there will be some developments towards this end over the next one year.
Pecca, which is 59% controlled by Teoh and his family, has all this while been generating revenue from its main business, which is the manufacture of leather upholstery for the automotive industry.
However, it recently pivoted into healthcare, or more specifically, the manufacture of face masks as a way to diversify its revenue stream.
The effort appears to have paid off.
Based on the group’s latest results, the mask business contributed some 63% to overall net profit.
Executive director Teoh Zi Yuen said the company makes a gross margin of about 30% from the masks it manufactures, which is generally higher than the industry average.
“We do see tremendous competition in this industry but we focus on high-quality, premium masks that meet all surgical and hospital requirements, so we are not really competing in the mass and low-margin segments,” she said.
She said she believed that the demand for masks will continue to be steady even as hygiene and health standards continue to improve amid the ongoing Covid-19 pandemic.
Currently, Pecca’s masks are sold in Malaysia, Singapore and Brunei and there are plans to penetrate more markets.
“As of now, we have two engines, our core business remains our leather business with healthcare being a major contributor to our group at the moment.
“EV is a good (future) direction,” Zi Yuen said.
For the financial year ended June 30, 2021, Pecca made a revenue of RM144.75mil and a net profit of RM19.2mil.
The company has cash of some RM78mil, which it said it is conserving to expand its core business and future EV business.
Pecca last traded at RM3.33 apiece, valuing the entire group at RM626mil.