Pekat Group Berhad has secured a significant boost to its solar project pipeline after the value of an existing large-scale solar (LSS) contract in Johor was increased to RM187 million following a major capacity expansion.
Its indirect wholly owned subsidiary, Pekat Solar Sdn Bhd, signed supplemental agreements on May 29 to revise the engineering, procurement and construction (EPC) contract for a solar facility in Kulai, Johor.
The revised agreement raises the contract value from RM86 million to RM187 million, an increase of RM101 million, after the project’s capacity was expanded from 63MWac to 135MWac. The additional 72MWac capacity is understood to represent Phase 2 of the development.
The expanded scope follows Pekat’s announcement to Bursa Malaysia earlier this week and is expected to be completed within approximately four months.
Kenanga in its notes described the development as positive for the group, noting that the enlarged contract will support earnings growth through FY2026.
Based on an assumed pre-tax profit margin of 8%, the research house estimates the additional RM101 million contract value could generate approximately RM8 million in incremental profit before tax. Combined with the original contract, total profit contribution from the project could reach about RM15 million, equivalent to roughly 9% of Kenanga’s FY2026 profit forecast for the company.
The latest contract enhancement also lifts Pekat’s outstanding order book to an estimated RM856 million, representing about 1.4 times its FY2025 revenue.
Kenanga estimates the order book is now diversified across solar projects (35%), electrical power engineering (41%), electrical line projects (22%) and trading activities (2%).
The brokerage said industry checks suggest the overall Johor solar development could eventually reach around 500MW across multiple phases, positioning Pekat favourably for further contract awards as the project progresses.
Despite the contract upgrade, Kenanga left its earnings forecasts unchanged, noting the award falls within its existing order replenishment assumptions of approximately RM350 million.
The research house maintained its “Outperform” recommendation on Pekat with a target price of RM1.91, based on a sum-of-parts valuation methodology that includes a 3% environmental, social and governance (ESG) premium.
Kenanga said it continues to favour Pekat due to its exposure to Malaysia’s renewable energy expansion, its profitability-focused approach in the solar EPC market, the earnings potential of its recently acquired switchgear business, and its strong position in the electrical line project segment.
However, it cautioned that risks remain, including reliance on government renewable energy policies, increasing competition in the EPC space and potential increases in solar panel and project-related costs.
