KUALA LUMPUR (May 31): Pekat Group Bhd’s net profit dropped 28.18% year-on-year in the first quarter ended March 31, 2023 (1QFY2023), as gross profit margin was weighed down by higher material costs and intense competition within the solar industry.

The group posted a net profit of RM3.16 million for 1QFY2023 versus RM4.4 million in 1QFY2022, even as revenue rose 2.92% to RM46.82 million from RM45.49 million on increased project executions in its solar photovoltaic (PV) as well as earthing and lightning protection (ELP) divisions.

Nevertheless, on a quarter-on-quarter basis, its net profit improved 36.21% from RM2.32 million registered in 4QFY2022, while revenue grew 3.98% from RM45.03 million. The group noted that it had incurred higher expenses for staff bonuses in 4QFY2022.

The group noted that the solar market remains vibrant despite the intense competition, as the government is committed to driving the development of renewable energy in the country by introducing new renewable energy initiatives.

“As the government is looking at removing electricity subsidies for the T20 income group, we will see more electricity users considering hedging against the increasing tariffs. The higher quota provided by the government under various solar PV installation programmes is seeing an encouraging response,” Pekat chief executive officer Tai Yee Chee said in a statement on Wednesday (May 31).

“On top of the increased Net-Energy Metering quota for both the commercial and industrial segment and the residential segment, the government is also allocating RM50 million for rooftop solar installations atop government buildings in 2H2023, as well as lifting the ban on renewable energy exports in the longer term,” he noted.

The group is now exploring investment opportunities for the Corporate Green Power Programme that allocates up to 30 megawatts of renewable energy capacity per project, said Tai.

“Meanwhile, our ELP segment secured sizeable projects including the Johor Bahru-Singapore Rapid Transit System and several contracts with data centre developers and semiconductor manufacturers. Among the notable ones are Yondr Group's Hyperscale Data Centre in Johor, Intel Corp’s Pelican Project in Penang and AIMS Data Centre in Cyberjaya, which Pekat is contracted to provide a total solution for ELP systems,” he said.

Pekat’s share price finished one sen or 2.56% higher at 40 sen on Wednesday, valuing the ACE Market-listed company at RM257.99 million. The counter has fallen 14.89% since the start of the year.