TA Research maintained its FY25 to FY27 earnings projections for PGF Capital.
PETALING JAYA: PGF Capital Bhd
is expected to maintain a steady financial performance for the third quarter of its financial year ending Feb 28, 2025 (3Q25).
According to TA Research, the group is anticipated to post a quarterly profit of RM6mil to RM8mil for the three months to November 2024.
PGF Capital is scheduled to announce its 3Q25 results this month.
The research house highlighted that the projected quarterly profit would bring PGF Capital’s cumulative nine-month earnings to RM22.2mil to RM24.2mil, representing 79% to 87% of the full-year forecast.
“Generally, we are anticipating a flat earnings growth in the second half of 2025 due to capacity constraint,” it noted.
The softer growth outlook is attributed to seasonal factors, particularly in PGF Capital’s key export market, Australia.
“The maritime trade and construction activities would tend to slow in Australia during this period in conjunction with year-end festivities, hampering the sales growth potential of glass wool insulation products,” the research house said.
Despite this, the selling price of glass wool insulation products is expected to remain robust at RM6.60 per kg for the second half of FY25.
On its capacity expansion efforts, TA Research reported that PGF Capital’s new plant in Kulim East is progressing as scheduled, with completion anticipated by the first quarter of 2026.
“We understand that the land has already been cleared and flattened for construction works to begin soon. We reiterate that the expansion, which will increase its annual production capacity to 65,000 from 25,000 tonnes currently, would be the engine of growth for FY27 and beyond,” it stated.
Additionally, PGF Capital’s planned housing development project at Kulim High-Tech Park, with a gross development value of RM600mil, is expected to contribute to its financial performance from FY27.
“We project the progress billing from this RM600mil gross development value project to begin from FY27 onwards. In essence, we expect the project launch to begin right after the completion of land acquisition exercise this year,” it said.
TA Research also addressed concerns about rising electricity tariffs, noting that energy costs constitute 30% of PGF Capital’s total production cost.
However, it said: “We do not think there would be a significant earnings impact from higher electricity cost as we believe it could be fully passed on to the consumers.”
It maintained its FY25 to FY27 earnings projections for PGF Capital and reiterated its “buy” call on the company’s with a sum-of-parts valuation of RM3 per share.
“At RM3, the implied price-earnings ratio of 16 times 2025 earnings is considered fair for an investment in a carbon-neutral company, which will stand to gain from robust demand and regulatory support in future,” it said.
