not vested
13 September 2016
Pecca gets a lift from DCA green lightBY S. PUSPADEVI
Apart from its core business of producing leather upholstery for the automotive sector, the Kepong-based company also refurbishes aircraft parts, including arm rests, toilet lids, side panels, food trays and fairings
PETALING JAYA: Pecca Group Bhd, which makes leather upholstery for the automotive industry, is now able to bid for more upholstery jobs in the aviation industry after receiving the green light from the Department of Civil Aviation (DCA).
“We already have small trial contracts with AirAsia Bhd, Malindo Air and Singapore-based ExecuJet,” he said, declining to disclose the contract values.
Listed six months ago, Pecca has a market value of RM372.2mil and derives 78% of its revenue from supplying leather car-seat covers.
Since the company made its announcement on the DCA’s approval on Thursday, its shares rose 6.45% to settle at RM1.98 on Friday.
According to Maybank Investment Bank Research, Pecca is the first homegrown company to bag a specific leather upholstery licence for the aviation industry from the DCA.
It has reiterated a “buy” call on the stock with a higher target price of RM2.18, as it has pegged Pecca to
14.5 times calendar year 2017 earnings per share, from 13 times previously.
Meanwhile, Pecca’s refurbishment works were carried out in its 90,000-sq-ft manufacturing facility (excluding office building) located in Kepong.
“For the past five years, we have invested RM2.5mil to RM3mil per year in capital expenditure to upgrade machinery at our plant,” he revealed.
Pecca’s clientele include original equipment manufacturers (OEM) and pre-delivery inspection (PDI) market segments for vehicles such as
Perodua, Proton, Toyota, Mitsubishi, Nissan, Hyundai, Suzuki and Peugeot.“And despite the automative industry’s challenging landscape, we have continuously secured new projects for the mass production of leather car seat covers and the recent win was
Perodua Bezza,” noted Tan, adding that this would provide some catalysts going forward.
Despite Pecca’s 68% market share in the OEM and PDI segments, the opportunity is still huge in the replacement market segment, according to him.
“Only 35% of locally-assembled cars are pre-equipped with leather, while the remaining 65% comes installed with fabric seat covers,” said Tan.
He revealed that Pecca had plans to expand into Thailand’s automative industry, which has bigger industry volume, and since its customers such as Nissan and Mitsubishi are also present there.
The company recently secured a first trial order from Honda Access for Smart Fit supply.
In terms of dividends, Pecca declared a single-tier dividend of two sen per share for the third quarter ended March 31, 2016 and fourth quarter ended June 30, 2016, respectively.
“We are confident that we can maintain our 40% dividend policy payout from profits, but this does not mean that we will continue paying dividends every financial quarter, going forward,” he said,
The company posted a net profit of RM2.78mil against revenue of RM33.57mil in its fourth quarter ended June 30, 2016.
Source: The Star
http://www.thestar.com.my/business/busi ... FiqDuBp.99
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