KUALA LUMPUR (March 31): Hong Leong IB Research has valued soon-to-be listed Pecca Group Bhd at RM1.88 and listed four catalysts for the company.
In an IPO note today, the research house said it expects the first catalyst to be strong leather program demand from OEMs and distributors in order to boost sales volume for 2016, given the ongoing weak consumer sentiment.
“Catalysts 2 – Penetrating into retail market with set up of 50 retail presences (either own outlets or third party retailer) throughout Malaysia. Malaysia has large population of 11m cars with circa 80% fabric seats) and 640k sales per annum with 65-70% fabric seats).
“Catalysts 3 – Penetrating Thailand market with the establishment of a new JV in Thailand, a major automotive hub in South East Asia.
“Catalysts 4 – Penetrating aviation industry with the provisions of refurbishments of aircraft interiors (including leather upholstery).
“Our fair value for Pecca is RM1.88, based on 15x FY06/17 PE, given its strong earnings growth and net cash of RM66.9 million RM35.6sen per share) by FY06/16,” it said.