PETALING JAYA: Analysts remain positive on Pecca Group Bhd
for its multiple growth drivers across the replacement equipment manufacturer (REM) and aviation segments, while earnings continue to be well supported by resilient sales for car maker Perodua.
The company, which is involved in the manufacturing, distribution, and installation of upholstery for seat covers in the automotive and aviation industries is also well-positioned to secure seat assembly contracts from Chinese original equipment manufacturers or OEMs through the expansion of its new manufacturing facility, said UOB Kay Hian Research (UOBKH Research).
The research house said Pecca was benefitting from resilient Perodua sales, noting that the national automaker achieved record sales of 359, 904 units last year, maintaining a 43% share of total industry volume.
“This year, we expect Perodua to maintain its market share, driven by robust demand for its budget-friendly models and supported by sales of newly launched models Traz and QEV, the research house said.
UOBKH Research said Pecca stands to benefit from Perodua’s strong sales momentum, which should continue to support earnings in the OEM segment, as the national auto maker currently accounts for around 80% of the company’s OEM revenue.
“In addition, the company will commence mass production of instrumental panel wrap for an electric vehicle model in the second half of this year, which we estimate will contribute around 2% to the top-line growth,” it added.
UOBKH Research said, following earlier delays in REM sales due to reciprocal tariffs, it understands that the first shipment to a key US- based client was completed last November, which would translate into earnings in Pecca’s second quarter of its financial year ending June 30 (FY26).
Moving forward, Pecca expects increased shipment volumes to the client and is also working on introducing additional templates in FY27.
The company is also exploring other new markets, such as the Middle East, where it is finalising a sales agreement with a prominent distributor of a Japanese car brand, the research house noted.
UOBKH Research has forecast the REM segment’s revenue to double in FY26 following contributions from the new export markets.
“While the appreciation of the ringgit against the US dollar might partially reduce export earnings, we expect the overall impact on the bottom line to be neutral given Pecca’s reliance on imported leather, which provides a natural hedge,” the research house said.
In the aviation segment, Pecca’s wholly owned subsidiary Pecca Aviation Services Sdn Bhd (PASSB) signed a memorandum of understanding late last year with a Betamek Bhd unit, Betamek Research Sdn Bhd, to collaborate on in-flight and in-train entertainment systems.
The companies said the collaboration would leverage Betamek Research’s proven experience and strengths in research, design and development in engineering and technology for electronics manufacturing services, alongside PASSB’s expertise as a Civil Aviation Authority Malaysia approved maintenance, repairs and overhaul solutions provider for aircraft cabin interiors.
BRSB would spearhead the development of digital interfaces, entertainment terminals, and content management systems, software integration tailored for aviation and train applications while PASSB would focus on integrating the digital infotainment technologies into seating and cabin platforms, ensuring compliance with international aviation and railway standards.
UOBKH Research has maintained its “buy” call on Pecca with a higher target price of RM2.04 from RM1.70.
