(Aug 13): Shares of Pekat Group Bhd (KL:PEKAT) rose to their highest in more than month in active trade on Tuesday after the company announced a contract for earthing and lightning protection at a data centre.
Pekat rose by as much as 4.7% or 4.5 sen to RM1.01, its highest since July 17, 2024. The stock was trading at 99.5 sen at 10.30am, giving the company a market capitalisation of RM642 million. More than 3.36 million shares changed hands so far, above the trading volume’s 200-day moving average.
The contract is not Pekat’s first data centre-related project, though analysts say the company will likely continue to tap on similar projects that provide faster billings.
“We see this move as a further reinforcement of their track record, allowing them to capitalise on the growing trend of data centres,” said Apex Securities, one of only three research houses covering the stock. Apex also raised its target price to RM1.20 from RM1.14 and maintained its ‘buy’ call.
Shares of Pekat Group have more than doubled so far this year as investors bet on renewable energy transition and the company’s exposure to the rapidly-growing investments into data centres in the country.
The 12-month consensus target price is RM1.22, according to Bloomberg, implying a return potential of over 22% from its last price.
On Monday, Pekat announced that it has won a contract worth RM21.78 million to install earthing and lightning protection for a data centre facility. The location and work description suggest that the job is related to the hyperscale data centre in Elmina Business Park.
The latest win raised Pekat’s outstanding order book to about RM206.8 million, more than half of which are earthing and lightning protection contracts. The rest are contracts related to installation of solar panels.
Pekat’s current jobs on hand will contribute to earnings till 2025 while more than half of the fast-track projects will be executed and recognised this year, Apex noted.
For MIDF Amanah Investment Bank, the latest contract also underscores Pekat’s strategy to take on fast-paced earthing and lightning protection projects in line with the growing trend of industrial buildings such as data centre.
“We are positive on its latest contract win,” the house said. Furthermore, Pekat’s orderbook is expected to swell to RM320 million by the end of 2024 from construction contracts under the Corporate Green Power Programme, MIDF added.
The house also maintained the stock on ‘buy’ recommendation and its target price at RM1.32.