Pekat Group Berhad secured RM47 million worth of new contracts to provide earthing and lightning protection (ELP) systems for two data centre projects in Port Dickson and Johor, reinforcing expectations of sustained growth from Malaysia’s expanding data centre sector.
According to a research note by Kenanga Investment Bank, the contracts were awarded to Pekat Teknologi Sdn Bhd, with the Port Dickson project valued at RM20 million and the Johor project at RM27 million.
The Port Dickson contract is expected to be completed by the second quarter of FY2027, while the Johor project is scheduled for completion in the third quarter of FY2027.
Kenanga said the latest wins are expected to support Pekat’s earnings growth through FY2027. Assuming a gross profit margin of about 30%, the contracts could contribute approximately RM14 million in gross profit over their execution period.
Following the awards, Pekat’s outstanding order book is estimated to have risen to RM994 million, equivalent to about 1.6 times its FY2025 revenue. The order book comprises approximately 35% engineering, procurement and construction (EPC) projects, 24% ELP works, 21% solar projects and 2% trading activities.
The research house remains optimistic on demand for ELP solutions, citing continued investment into Malaysia’s data centre industry. It noted that Malaysia attracted a record RM38.9 billion in annual foreign direct investment linked to the sector, supporting a robust pipeline of infrastructure projects.
Kenanga also expects contract values for earthing and lightning protection systems to increase as more Tier 3 and Tier 4 data centres are developed, where higher standards of reliability and system uptime are required.
The positive outlook is reflected in Pekat’s ELP order replenishment, which has reached RM87 million year-to-date, already exceeding the segment’s full-year FY2025 revenue of RM67 million.
With an estimated 60% market share in Peninsular Malaysia’s ELP segment, Pekat is viewed as being well-positioned to capture further opportunities arising from the country’s data centre expansion.
In light of the stronger-than-expected contract flow, Kenanga has raised its FY2026 order replenishment assumption to RM580 million from RM550 million, with ELP contracts contributing RM100 million. Its FY2027 assumption was also increased to RM600 million from RM570 million, with RM120 million expected from ELP projects.
The revised assumptions prompted Kenanga to raise its earnings forecasts by 2% for FY2026 and 7% for FY2027.
Consequently, the research house lifted its target price on Pekat to RM2.00 from RM1.91 while maintaining an “Outperform” recommendation. The valuation is based on a sum-of-parts methodology and incorporates a 3% ESG premium to reflect the company’s environmental, social and governance profile.
Kenanga said it continues to favour Pekat for its ability to capitalise on Malaysia’s renewable energy expansion through a profitability-focused strategy, the earnings contribution from its recently acquired switchgear business, and its dominant position in the earthing and lightning protection market.
However, it cautioned that key risks include changes in government renewable energy policies, increased competition from new engineering and solar EPC players, and potential increases in solar panel prices and other project costs.
