PETALING JAYA: Pekat Group Bhd
’s wholly owned subsidiary Pekat Teknologi Sdn Bhd (PTSB) is proposing to buy a 60% stake in Apex Power Industry Sdn Bhd for RM96mil cash as part of a diversification of the group’s business into the power distribution equipment business.
In a filing with Bursa Malaysia, Pekat – a solar energy solution provider – noted that PTSB will enter into a conditional share sale agreement with sole Apex Power shareholder Low Khek Heng (also known as Low Choon Huat) for the acquisition of 75,000 shares.
Nilai-based Apex Power as well as its wholly owned subsidiary EPE Switchgear (M) Sdn Bhd are involved in manufacturing, engineering and project activities within the electrical-power industry.
It is also known to be one of Malaysia’s largest manufacturers of medium voltage electrical switchgears.
According to Pekat, the proposed acquisition will allow the group to leverage on the power distribution equipment business industry’s favourable growth prospects as well as Apex Power’s foreign market presence.
EPE Switchgear’s products are sold to countries like Qatar, Sri Lanka, Oman, Australia and Germany.
The Pekat group also plans to market and integrate its existing products and services with a range of power distribution marketed under the EPE brand.
“Upon completion of the proposed acquisition, the group will be able to expand its range of products and services and provide additional revenue streams to the group, thereby increasing the value of the group,” it stated.
Additionally, Pekat said the proposed acquisition also comes together with the aggregated profit guarantee of RM48mil from Apex Power over financial years 2024, 2025 and 2026.
The group believes the aggregated profit of guarantee is realistic after taking into consideration the unbilled order books of EPE Switchgear of RM204.32mil as at July 17, 2024.
“As a result, Pekat is expected to increase its profitability by consolidating Apex Power’s profit after tax, hence strengthening its financial performance,” it added.
The purchase will be funded via internally generated funds and bank borrowings.
In conjunction with the proposed acquisition, Pekat is also looking to diversify its existing business as well as its subsidiaries’ to include design and fabrication of power distribution equipment.
Via the proposed diversification, Pekat expects to diversify its earnings base and reduce the business risk of dependency on its existing business, all while contributing positively to the future growth and earnings of the group.
In the meantime, Low has also decided to sell the remaining 40% stake in Apex Power to Mega First Power Industries Sdn Bhd (30% equity), Rubber Thread Industries (M) Sdn Bhd (7% equity) and Mohammed Zhakri Mohammed Azlan (3%).
