PETALING JAYA: Pecca Group Bhd
is expected to see sequential recovery in earnings in its fourth quarter (4Q26), largely buoyed by improved Perodua sales performance, says UOB Kay Hian (UOBKH) Research.
Following a 34% quarter-on-quarter (q-o-q) seasonal decline in earnings in 3Q26 to RM10.2mil, after a temporary plant shutdown, the research house predicted the group’s earnings to grow 37% q-o-q and 1.5% year-on-year in 4Q26, recovering to RM13mil to RM15mil.
“This will be mainly driven by a recovery in Perodua’s production volume, in line with the national marque’s improved sales performance, which rose 13% q-o-q to 84,062 units during April to June 2026.”
UOBKH Research also forecast the group’s replacement equipment manufacturer (REM) segment revenue to double in financial year 2026 (FY26) as a result of sales contribution from new export markets.
Despite earlier delays in executing export sales, it delivered three shipments to its US-based client in 3Q26, estimated to bring around RM1mil in REM sales, and began delivering orders to its Saudi-based client, a key sole distributor of Toyota in the country.
“Moving forward, Pecca expects increased shipment volumes to the client and is also working on introducing additional templates for FY27.”
The group is confident in securing sizeable recurring maintenance, repair and overhaul (MRO) contracts, including one from a Myanmar-based airline with potential annual revenue exceeding that of its current largest aviation customer.
Pecca has also tendered for an umbrella MRO contract with the national airline, targeting wins worth approximately RM10mil per annum, which UOBKH Research said could enable it to surpass its FY27 aviation revenue target of RM5mil.
Meanwhile, the group’s new Serendah facility, scheduled for commissioning in January 2027, is anticipated to support its new seat assembly business venture, with major Chinese automakers Chery and GWM as potential clients.
However, the research house expects contributions from the new venture to only materialise in the latter part of 2027.
UOBKH Research has projected a 17% earnings compound annual growth rate for the group over the FY26 to FY28, on the back of export sales growth, increasing contribution from the aviation segment, and incremental capacity expansion.
It maintained its “buy” call on the stock with an unchanged target price of RM1.66, derived from a 17 times multiple of the 2027 price-to-earnings ratio – a premium to the sector average of 11 times price-to-earnings.
It said the valuation is justified given Pecca’s resilient earnings, underpinned by Perodua’s sustained sales volumes, growth prospects from diversification into the export market and aviation industry, and its above-industry average net margin of 25%.
