KUALA LUMPUR (March 10): Upholstery manufacturer Pecca Group Bhd (KL:PECCA) will provide consultancy services in Malaysia to Chinese automotive technology player Shanghai Launch Automotive Technology Co Ltd under a deal entered into on Monday.

Pecca said the group will act as Shanghai Launch's exclusive sales and marketing partner and consultant in Malaysia to advise and assist the Chinese company in its dealings with end customers in automotive design and development, as well as automotive products and projects.

Pecca chief executive officer Foo Ken Nee said the partnership presents an opportunity for both Pecca and Malaysia to move up the supply chain while advancing automotive technology and local content customisation.

Speaking at the collaborative agreement signing ceremony, he said Pecca is exploring opportunities in both internal combustion engine-powered cars and electric vehicles (EVs), with priority given to EVs.

“We have been aiming to be a larger automotive contributor in Malaysia. That means that we want to be able to expand from where we are for the last 25 years, purely just managing business in tier-2, providing car leather seat (covers). We are looking at moving up the supply chain to be able to work on seat assembly, potentially to the designs as well,” Foo said.

Stressing the need for Pecca to evolve for long-term sustainability, Foo said: “What we are trying to build is what the next 25 years are going to look like. We have done well in the first cycle of tier 2 activities that we have been doing.”

“If we do not move ahead and adapt ourselves to the new environment and look for new opportunities for growth, we will eventually lose out to competition, we will lose out to new creative ideas, and we will not be growing ourselves,” he added.

Under the partnership, Pecca will provide consultancy services leveraging its expertise in manufacturing, after-sales service, and local market knowledge, including consumer preferences, regulatory requirements, and industry trends. The collaboration is expected to facilitate technology and knowledge transfer to Malaysia’s automotive workforce.

Shanghai Launch, one of China’s earliest independent automotive research and development institutions, specialises in vehicle design, development, and turnkey projects, including styling, chassis development, powertrain engineering, and performance analysis.

Shanghai Launch chairman Wang Xun noted that this is the company's first collaboration in Malaysia.

In Southeast Asia, Wang said Shanghai Launch had previously  empowered a Vietnamese car maker to transform from a local small brand to the top EV manufacturer in the country.

“We are looking forward to having this kind of case in Malaysia through this cooperation with Pecca. This cooperation with Pecca will [accelerate] the transition of the automotive industry in Malaysia [with the rise of EV], Wang added.

Commenting on the group’s prospects, Pecca’s Foo said the group is looking for another fresh record performance for the financial year ending June 30, 2025 (FY2025), supported mainly by its automotive segment.

“We are also looking for efficiency improvements in our operations. In terms of overall sales, we will look into expanding to new markets as well as expanding the replacement equipment manufacturer (REM) segment, which may not have been that significant previously,” said Foo.

The REM segment recorded a revenue of RM4.01 million, or 3.4% of its total revenue of RM118.56 million, for the first six months of FY2025.

Pecca has reported a 13.3% increase in net profit to RM29.91 million for the six-month period, from RM26.39 million in the same period a year earlier, while revenue slipped 8% to RM118.56 million from RM128.8 million. The increase in earnings was helped by lower administrative expenses, finance costs and higher finance income, its bourse filing showed.

The group had cash and cash equivalents of RM108.55 million as at end-December 2024. Total borrowings stood at RM5.49 million.

Shares of Pecca closed up two sen or 1.3% at RM1.52 on Monday, bringing the group a market capitalisation of RM1.14 billion.