PECCA

PECCA

Postby winston » Wed Aug 09, 2017 9:52 am

not vested

Trading Buy: PECCA-5271
(Last price: RM1.52, Potential upside +15.1%)

Company Profile
Pecca is the largest car leather upholstery supplier with 67.7% market share in Malaysia and had also penetrated into aviation market.

Trading Catalyst
Beneficiary of growing Malaysia's auto industry and potential rise in exports markets.
Increasing leather program by OEMs
Anticipate rising orders from airlines in FY18

Technical View
Resistance: RM1.60 / RM1.70 / RM1.75
Support: RM1.49 / RM1.45
Cut loss: RM1.44

Key Financial Stats
FY17-19 EPS CAGR of 11%
FY19 Netcash/shr =55sen
FY19 P/E (ex-cash) = 9.3x

Source: Bloomberg, HLIB
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Re: PECCA

Postby winston » Wed Aug 09, 2017 10:19 am

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PECCA GROUP BHD
By Maybank Investment Bank Research

Buy
Target price: RM1.80

PECCA’S nine-month 2017 net profit of RM11.8mil, which met only 70% of Maybank Investment Bank (Maybank IB) Research’s full-year estimate, was in-line as it expects a stronger fourth quarter 2017 on the back of a recovery in car production by its clients (namely Perodua, Toyota and Nissan).

The research house said its forecasts remained.

“Maintain ‘buy’ on Pecca with an unchanged RM1.80 target price for an exposure to Perodua, especially for the Myvi model launch in the third quarter of 2017 and potential aviation contract win.”

The research house said the setback in Pecca’s automotive segment is temporary as it expected total industry production to recover in the fourth quarter of 2017 to support demand of mass-market models (such as the Perodua Axia FL and Bezza FL).

This is to be launched in time to capture demand in the upcoming Hari Raya festivity in end-June.

“The launch of a new Myvi, Perodua’s premium range model, in the second half of 2017 would also provide a growth angle for Pecca in 2018.

“Furthermore, a gradual recovery in the ringgit against the dollar is beneficial to Pecca whose leather costs are mostly denominated in dollar.”

Maybank IB Research also said new development on Pecca’s new aviation division could unlock the next engine of growth for Pecca.

“Our earnings forecasts have yet to incorporate contribution from the aviation segment.”

Source: The Star

http://www.thestar.com.my/business/busi ... l.99Source:
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Re: PECCA

Postby winston » Wed Aug 09, 2017 10:22 am

23 May 2017

Maybank IB: A temporary blip in TIV


KUALA LUMPUR: Maybank Investment Bank Research expects the automotive total industry volume (TIV) to hover at similar levels in May before picking up in June, leading up to the Hari Raya festivity where sales are commonly made.

The research house said second half of 2017 would likely see better sales especially for marques with scheduled new launches.

“We remain positive from a bottom-up stock pick with buys on MBM Resources and Pecca Group for Perodua exposure, and Tan Chong Motor Holdings on trough valuations,” Maybank said.

It describe the volume contraction in April 2017 TIV as a “temporary blip”. It added that the key month-on-month volume contraction was mainly from Perodua and Honda whereby the former was affected by the phasing out its pre-facelift models (Axia and Bezza) while the latter saw a month-on-month sales hangover after a strong push in March 2017 to close its financial year.

Overall, the month-on-month contraction in TIV was almost across the board except outliers such as Mazda (+21% MoM) and BMW (+6% MoM).

“Despite stronger year-on-year TIV sales in first quarter 2017, auto players would likely continue to report weaker quarterly earnings if not losses, mainly coming from higher imported component costs impacted by still a weak ringgit.

“Nonetheless, with the recent strength in ringgit against US dollar and Japanese yen coupled with stronger TIV, we take the view that the sector has bottomed and is en route for an earnings recovery 6-9 months from now,” Maybank said.

The research house believes that TIV should improve half-on-half in second half of 2017, on the back of popular mass-market launches (Perodua Myvi, Mazda CX-5, Honda Jazz FL), with highlights on Perodua’s new Myvi which could bring back some excitement to the industry.

“We prefer MBM as a proxy to Perodua’s growth as a shareholder, auto-parts supplier, and dealer. Within our coverage, we also like Pecca as the sole supplier of leather car seat covers to
Perodua.
Elsewhere, TCM is attractive from a valuation perspective.

“We also see earnings recovery coming from an on-going purchase cost adjustment with Nissan, potential breakeven of its Indo-China operations, stronger contract assembly volumes from Mitsubishi and Subaru at its Segambut plant,” Maybank said.

Source: The Star

http://www.thestar.com.my/business/busi ... yQRh6Yz.99
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Re: PECCA

Postby winston » Wed Aug 09, 2017 10:23 am

21 March 2017

Pecca-AirGO JV to make seat covers for Lima 2017

PETALING JAYA: Pecca Group Bhd’s 60% subsidiary Pecca Aviation Services Sdn Bhd has entered into a joint development agreement with Singapore-based AirGo Design Pte Ltd (AirGo) to develop aircraft seat covers for the Langkawi International Maritime and Aerospace Exhibition 2017 (Lima 2017).

In a filing with Bursa Malaysia yesterday, Pecca said that the agreement has commence this month and would expire on March 19, 2019.

It said that under the agreement, Pecca would provide an advisory role on the required technical, construction and know-how support for the development of AirGo’s designed seats for Lima 2017.

“Pecca Aviation shall undertake construction of two model sets for Lima 2017 for AirGo,” it said.

On the rationale of the joint development, Pecca said that the agreement would leverage on AirGo’s seat technology and design, while tapping on Pecca’s knowledge and experience in engineering and manufacturing of upholstery seat cover to produce the aircraft seat, known as “Mark 1”.

“Mark 1” will be displayed at the air show and Pecca will endeavour to secure more seat manufacturing contracts at the show.

“The directors hope that the agreement with AirGo will lead to future aviation leather upholstery supply contract from Pecca Aviation to AirGo,” Pecca said.

It said that the joint development agreement would not have any material effect on the net assets per share and gearing of the group for the financial year ending June 30, 2017.

Source: The Star

http://www.thestar.com.my/business/busi ... ZjbsOg2.99
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Re: PECCA

Postby winston » Wed Aug 09, 2017 10:28 am

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13 September 2016

Pecca gets a lift from DCA green light

BY 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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Re: PECCA

Postby winston » Wed Aug 09, 2017 10:32 am

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9 September 2016

Aviation job will be game changer for Pecca Group


KUALA LUMPUR: Pecca Group Bhd’s entry into the aviation industry will be a potential game changer for the company, said Maybank Investment Bank (IB) Research.

The research house reiterated its Buy call on the car leather upholstery maker on Friday, with a higher target price of RM2.18.

“Pecca’s entry into the aviation industry, where barriers to entry are high, is a testament of its capabilities,” it said.

With over 200 existing aircrafts under the AirAsia Group, AirAsia’s collaboration with Mirus Aircraft Seating to replace existing and supply new aircraft seats offers a potential job

value of RM108mil to RM144mil (assuming 180 seats per plane, and RM3,000 to RM4,000 per seat).

Maybank IB Research noted that Pecca was the first local-breed company to secure a specific leather upholstery scope license for the aviation industry from DCA.

“Opportunities in the aviation industry coupled with sustained momentum in its Perodua exposure are key drivers for earnings growth.

Source: The Star

http://www.thestar.com.my/business/busi ... rRr6yLj.99
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Re: PECCA

Postby winston » Wed Aug 23, 2017 10:09 am

not vested anymore

Closing FY17 on a softer tone

Below expectations

FY6/17 core net profit of MYR14.7m (-11% YoY) met only 93% of our and consensus’ full-year estimates.

Despite 4QFY17’s strong QoQ revenue rebound (+27% QoQ), unusually high taxes hindered earnings recovery to previous levels.

We lower our FY18-19 net profit forecasts by 5%-8% on higher tax rates and opex forecasts mainly from usage of outsourced labour; we also introduce our FY20 earnings forecast.

Maintain HOLD with a lower TP of MYR1.60 (-6%), pegged on unchanged 14.5x CY18 EPS (20% premium to peers valuation).

Source: Maybank


https://factsetpdf.maybank-ke.com/PDF/6 ... 0851a5.pdf?
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Re: PECCA

Postby winston » Fri Apr 13, 2018 8:48 am

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Trading Buy: PECCA-5271
(Last price: RM1.18, Potential upside +22.9%)

Company Profile
• Pecca is the largest local player in automotive leather upholstery, with over 65% market share. It is also diversified into aviation leather upholstery and parts refurbishment.

Trading Catalyst
• HLIB has a BUY rating with RM1.72 TP (+45.7% upside), with undemanding valuation at 11.6x FY19 P/E (30% lower than average 16.6x P/E), supported by a commendable 12% EPS CAGR from FY17-20 and potential downtrend reversal.
• OEMs will continue adapt higher leather program for new model introduction as the market becomes more competitive and demanding, benefiting PECCA
• After a weak1H18, expect stronger 2H18 and coming years amid gradual production ramp up of Perodua’s (its biggest customer) new MyVi model, new line up of Alza facelift and new SUV planned by end 2018, together with new models from Proton/Toyota.
• Anticipate higher dividend payout (expecting FY18-19 DY of 5.1%-6.8%) amid steady cashflow and low capex and strong netcash of 42sen/share.

Technical View
• Resistance: RM1.25 / RM1.32 / RM1.45
• Support: RM1.13 / RM1.10
• Cut loss: RM1.08

Key Financial Stats
• Trading at 11.6x FY19 P/E (ex-cash 6.8x), below average 16.6x since listed.

Source: HLIB
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Re: PECCA

Postby winston » Wed May 23, 2018 8:38 am

not vested

Trading Buy: PECCA - 5271
(Last price: RM0.870, Potential upside +37.9%)

Company Profile
• PECCA is involved in the leather upholstery of passenger car seats covers for OEM, pre-delivery inspection (PDI) and replacement equipment manufacturing (REM) market segments, as well as the supply of leather cut pieces and others to the automotive leather upholstery industry.

Trading Catalyst
• Pecca’s top client Perodua has shown monthly production units and monthly TIV sales growing steadily in 1Q18, which may benefit Pecca in the upcoming results.
• Also, Pecca is trading at 8.5x FY19 P/E (49% lower than average 16.6x P/E since listed), supported by net cash of 50 sen per share (ex-cash P/E of 3.6x).
• We think the recent selling pressure was overdone as investors perceived Pecca as BN-linked (Independent Non-Exec Chairman was previously political secretary of ex-PM).
• Anticipating a technical rebound towards RM0.90-1.00. Support at RM0.75-0.78, with a cut loss set at RM0.74.

Technical View
• Resistance: RM0.920 / RM1.00 / RM1.20
• Support: RM0.780 / RM0.750
• Cut loss: RM0.740

Key Financial Stats
• 8.5x FY19 P/E (49% lower than avg 16.6x P/E)
• Net cash: 50 sen per share (ex-cash P/E at 3.6x)

Source: Bloomberg, HLIB
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Re: PECCA

Postby winston » Fri May 25, 2018 9:10 am

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Surprise on the downside
Share price over corrected?


Disappointing QoQ revenue growth in 3QFY18 (+4% QoQ) coupled with sharp margin contraction (-3.8ppts QoQ) led to a 29% QoQ fall in earnings.

Expecting slower revenue and weaker operating margins due to production yield inefficiency and higher labour cost, we cut FY18-20E earnings by 22%-29%.

Correspondingly, our TP is lowered to MYR1.25 (-22%) on unchanged 14.5x CY19 PER (in line with our valuation peg for auto companies).

Despite a poor set of results, we believe that the share price may have over corrected.

Current valuations are attractive at 4.5x CY19 ex-cash PER. Maintain BUY.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/9 ... 0ccf96.pdf
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