Small-caps to gain from thematic growth trends

PETALING JAYA: RHB Investment Bank Bhd has highlighted a few companies like GDEX Bhd, Protasco Bhd and Pekat Group Bhd following its RHB Small Cap Corporate

Access event.In a report to clients, it said small-cap companies are often known for their agility and adaptability to changing market dynamics. “Distinctive strategies are adopted by most of the companies to capitalise on diverse growth opportunities.

“These include, but are not limited to, leveraging on favourable government policies, structural thematic growth trends, new market/customer penetration, new project wins, diversifying product portfolios, expanding technical capacities and mergers and acquisitions.”

RHB noted that GDEX was transforming from a purely domestic logistics provider into a comprehensive regional and global business solutions provider.

The company is expanding its market reach across several countries including Saudi Arabia, Indonesia, Vietnam, Cambodia, Singapore and the Philippines, it said, adding that strategic partnerships played a key role in its expansion plans.

It noted that the company had key strategies for sustainable growth, which include accelerating scalability through cross-selling and regional replication and streamlining processes by developing more value-added shared services.

For its cybersecurity sub-segment, it plans to launch Anon Guard, a subscription-based cybersecurity solution offered at competitive prices, it added.

Protasco, it said, is widely regarded as the largest road maintenance player in Peninsular Malaysia, as it maintains over half of the region’s federal, state and rural road networks, with a total length of 25,000km.

“Under Budget 2025, RM2.8bil has been earmarked for the maintenance of primary roads, while another RM1bil has been allocated for non-primary roads – mostly backlogged maintenance works for secondary and Federal Land Development Authority or Felda-related roads.

“Along with a collective RM5.5bil from the individual state budgets, the flow-through from these projects should bode well for Protasco in the financial year ending Dec 31, 2025 (FY25).”

RHB noted the group prefers to focus on its existing network of roads, and has no immediate intentions to expand its territory for now.

As for Pekat, is said the company’s solar, earthing and lightning protection, and trading divisions catered to a wide range of business sectors, including commercial and industrial, residential, infrastructure and community properties.

“As the barriers to entry in this market are high and given Pekat’s extensive track record, the group believes it has a strong opportunity to secure major projects.”

RHB noted that in mid-December last year, Pekat successfully completed a 60% acquisition of EPE Switchgear (M) Sdn Bhd.

“Management anticipates contributions from EPE to begin from FY25 onwards. Additionally, the group expects growth to be driven by Tenaga Nasional Bhd’s ongoing grid and infrastructure upgrades.”

RHB said various in-trend thematic plays remained constructive for the small-mid cap segment, and positive traction may resume once the risk-on sentiment improves. These include the Johor and Sarawak investment themes, data centre-related plays, infrastructure, trade recovery, commodity plays, and revival in chip and electronic manufacturing services.