Affin Hwang projects higher car seat sales for Pecca

TheStar Mon, Jan 20, 2020 08:45am - 4 years View Original


KUALA LUMPUR: PECCA GROUP BHD's management is guiding for higher volumes from its original equipment manufacturer (OEM) segment in the first half of its 2020 financial year on the back of the recent Axia and Bezza facelifts.

Affin Hwang Capital research said in a note that the segment, which represents Pecca's largest revenue contributor, is continuing its upward momentum with 1QFY20 revenue growing 94% year-on-year to RM23.5mil.

It said this was backed by strong demand for Perodua leather-wrapped model variants, representing 64% of Pecca's 1QFY20 car seat sales volume.

"Upcoming expected model launches from Perodua, including the all-new D55L SUV and replacement Alza could potentially benefit Pecca moving into 2HFY20, we believe," said Affin Hwang.

Meanwhile, the research house's 1QFY20 revenue for its pre-delivery inspection segment fell 45% y-o-y to RM2.7mil in 1QFY20 owing to a 25% y-o-y decline in Nissan car sales volume.

However, it said possible new Nissan laucnhes could improve its prospects in 2HFY20.

Furthermore, Affin Hwang has learnt that orders from Proton's 2019 models such as the Iriz, Saga and Persona have slowly picked up since the final quarter of last year.

Moving forward, the research house believes Pecca stands a chance of winning the contract for Proton's leather localisation programme for the upcoming X50 based on its good working relationship with the car manufacturer.

Affin Hwang maintained its hold rating on Pecca with a higher target price of RM1.23 from RM1.20 previously as it adjusted its earnings per share forecast higher by 4% to 6% for FY20-22E.

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