PETALING JAYA: Pecca Group Bhd
is positioning itself for its next phase of growth as it expands capacity, broadens its aviation business and pursues new overseas opportunities, even as Malaysia’s automotive market normalises.
The group’s diversification strategy and continued investments are expected to support earnings resilience over the medium term despite near-term industry headwinds.
Mercury Securities Research maintained its “hold” recommendation on Pecca with an unchanged target price of RM1.43, saying the group remains well placed to sustain growth through capacity expansion, diversification and its strong position in the domestic automotive supply chain.
Following a recent webinar with management, the research house said Pecca’s ongoing expansion plans would significantly lift production capacity.
The group’s new Serendah plant remains in the architectural drawing stage, with the first phase expected to add approximately 150,000 seat sets by the end of December 2026, while full completion is targeted by the end of the fourth quarter of 2027.
Once fully operational, the new facility will double Pecca’s overall capacity to around 600,000 seat sets from the current 300,000, with management targeting about 70% utilisation during the plant’s first year.
The existing Kepong plant is currently operating at an approximate 80% utilisation across two shifts and is approaching full capacity.
“We are cautiously optimistic on Pecca’s resilience supported by a strong model pipeline, expansion of the aviation segment, and growing contribution from Indonesia,” Mercury Securities said, adding that it expects the group’s integrated business model to support profitability despite a softer automotive market.
“Management remains cost-cautious and cautiously optimistic in defending gross profit margin within the 40% range, underpinned by its strategy of positioning Pecca as a one-stop interior solutions provider rather than a single-product supplier, which management views as supportive of pricing power and margin resilience.”
It also highlighted encouraging prospects for the aviation maintenance, repair and overhaul business.
