Car upholstery specialist Pecca Group Bhd, which was listed on Bursa Malaysia in 2016, is principally engaged in the styling, manufacturing, distribution and installation of leather upholstery for the automotive and aviation industries. Its major customers include Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Proton Holdings Bhd, Toyota, Mitsubishi and Nissan.

In June 2020, Pecca jumped on the Covid-19 pandemic bandwagon, joining a multitude of non-healthcare companies to venture into the production of personal protective equipment (PPE) such as face masks, face shields and PPE garments, the demand for which had surged with the onset of the pandemic.

Its foray into the PPE segment, together with improved contribution from the automotive segment — as vehicle sales were boosted by the government’s 100% sales tax waiver for vehicles that are locally assembled and 50% for fully imported cars — resulted in Pecca’s annual net profit more than doubling to its then highest level of RM19.23 million for the financial year 2021 (FY2021), from RM8.39 million in FY2020. The strong achievement came as revenue grew 38.33% to its then highest of RM144.75 million from RM104.64 million previously.

The net profit achieved was higher than its pre-pandemic FY2019’s RM16.62 million, which jumped 62.63% from RM10.22 million in the previous year. The group’s earnings growth hit a speed bump in FY2020 due to the pandemic, and fell 49.52% to RM8.39 million.

The automotive segment remained the largest revenue contributor to Pecca in FY2021, at 87%. Its new healthcare business contributed a sizeable 12.4%, followed by furniture (0.36%) and aviation (0.26%). The group paid a dividend per share of 6.9 sen for FY2021, more than the six sen it paid for FY2019 and 4.6 sen for FY2020.

During the assessment period for The Edge Malaysia Centurion Club Corporate Awards 2022, Pecca’s share price (adjusted) jumped 241% from 22 sen on March 29, 2019, to 75 sen on March 31, 2022. It should be noted the group had, in January this year, undertaken a bonus issue of up to 564 million new shares on the basis of three bonus shares for every Pecca share held.

The share price gains translated into an adjusted three-year compound annual growth rate of 52.1%, based on awards methodology. This helped the group clinch the award for Highest Returns to Shareholders Over Three Years in the industrial products and services sector.

For FY2022, based on the unaudited results released at end-August, Pecca registered a fresh record high net profit of RM22.85 million, up 18.82% from FY2021, as cumulative revenue rose 13.57% to a new high of RM164.39 million.

In the bourse filing on its unaudited FY2022 results, Pecca said that given the strong orders that automakers are recording, it remains confident that the trend of demand for its products and services will continue to grow in FY2023. The group’s margins would also benefit from improving labour market conditions and the continued implementation of multi-year investment projects by the government, it added.

“The group will continue to focus on cost efficiency through continuous process improvement, automation and prudent procurement strategies. Despite the new minimum wage of RM1,500 per month having taken effect from May 1, 2022, it remains at manageable levels. The group has been working with various stakeholders to share the burden of rising operations costs,” it said.

Pecca is now gearing up for further growth following its expansion plan announced in January. It acquired 4.31 acres of land in Serendah from UMW Development Sdn Bhd to build a second manufacturing facility to increase its production capacity to cater for future orders. The new facility, to be completed by end-2023, will double the group’s production capacity to 40,000 to 50,000 seats per month, the group told The Edge Malaysia in a recent interview.

“We are targeting to start construction early next year. About RM20 million has been budgeted to construct the building, with another RM10 million to RM15 million for the installation of machinery,” said chief financial officer Yeo Bee Hwan.

The group also plans to move up the value chain into a Tier-1 automotive player that can manufacture entire seats instead of just seat covers, in its bid to double its top line in three to five years and achieve a market capitalisation of RM1 billion.