PETALING JAYA: Insulation products maker PGF Capital Bhd
is anticipated to face margin pressure going into 2026 which may affect its profitability if the ringgit momentum remains strong.
Following a recent meeting with the company’s management, TA Research said it expected the margin pressure on PGF to persist on the strength of the ringgit.
Based on the research house’s sensitivity analysis, PGF’s earnings would drop by 2.3% for every 1% rise in ringgit value against the Australian dollar.
However, it said the appreciation of the ringgit would also reduce the cost of machinery at its new manufacturing plant in Kulim East, Kedah.
The new plant is expected to commence operations in the first quarter of financial year 2027.
Based on the revised total capital expenditure of an estimated RM270mil, which had been raised from RM240mil due to extra costs for electricity connection, about RM100mil earmarked for machinery is denominated in US dollars, it noted.
The research house said any cut in US interest rates in 2026 would reduce the interest payments for the US dollar loan to finance the purchase of machinery.
Among others, PGF will submit a water concept plan to Lembaga Air Perak for its project site in Tanjung Malim.
Once the plan is approved, PGF’s 50.1%-owned joint-venture company, Nexel Group, can launch the project and PGF would be able to recognise a land sale gain, which is conditional on an 80% take-up rate.
The water concept plan would involve the company spending about RM5mil to RM6mil for the laying of water pipes.
