PECCA (5271) - Why Look Into PECCA

PECCA being the largest and leading automotive leather upholstery player in Malaysia’s OEM and PDI passenger vehicle segments, It has more than 25 years’ experience in leather craftsmanship.

Why am I talking about this stock?

PECCA clientele from OEM and PDI market segments include car brands such as PERODUA, PROTON, MITSUBISHI, TOYOTA, NISSAN, HONDA, HYUNDAI, SUZUKI, SUBARU, PEUGEOT, VOLKSWAGEN and ISUZU among others. It also export the leather car seat covers and relevant product to USA, EUROPE, JAPAN, ASUTRALIA, NEW ZEALAND and other Asian countries including Thailand, Indonesia and Singapore. Below is the snapshot obtain from PECCA website.

So, what are the hottest topic in Malaysia Automotive Industry?
Definitely is PROTON.
According to the article obtain from The Star
Under the agreement, Zhexiang Geely Proton’s research and development operations would become Geely’s Centre of Excellence in the Association of South-East Asian Nations (Asean), complementing the various other operating sites it has worldwide.

Malaysia would also become the right-hand-drive hub for Zhexiang Geely vehicles in this region.

This would ensure the Tanjung Malim is used to maximum capacity and this in turn would create new jobs for both the local community and at the national level

Another information need to be take note which is Currently, Proton’s annual production capacity stands at 50,000 units from Shah Alam and 150,000 units from Tanjung Malim. (*TOTAL CURRENT CAPACITY 200,000*) The Tanjung Malim plant, which opened in 2004, is designed to make up to a million cars per annum, a potential it has yet to fulfil.
For its part, one of Geely’s stated aims in the partnership with Proton is to make the Tanjung Malim plant a regional production hub for right-hand drive vehicles whilst also becoming part of the group’s vast global R&D network that includes facilities in across China, Europe, and even California, USA.
Mr Daniel Li, Executive Vice President and Group Chief Financial Officer of Geely stated that Geely is targeting a global production output of three million cars per year by 2020, and foresees a potential contribution of 500,000 units from Tanjung Malim by then. The number, if achieved, will include vehicles exported throughout the ASEAN region.

Above information obtain from

Let assume per year growth rate for production capacity increase by 50,000 year 2018, 100,000 by year 2019 and 200,000-3000 by year 2020.
Current production stood at 200,000 and next year forecast increase by 50,000 which will contribute 25% growth in business volume. However, align with the cost cutting measurement impose by Proton CEO, it most likely there will be a drop of 1-2.5% profit margin which currently I obtain from M+ Insage showing which last year profit margin stood at 11.9%

Overall, it should show grow in revenue together with the profit as well.
Positive Point :
1.Chart wise is showing reversal signal and improving a trading interest.
2. Share buy back has started since May 2017 and company has accumulate up to 1.61% since it started 25 May 2017

Conclusion : Business prospect should be looking positive for the year 2018 leverage on the expansion on Proton-Geely. * Provide PECCA obtain project from PROTON.
Disclaimer : Trade at your own risk, Kindly consult your investment broker for any investment decision. Above is my personal opinion and it does not solicit any buy/sell call for above counter.
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