PETALING JAYA: PGF Capital Bhd
is expected to see higher shipment and packaging costs as a result of the Iran war, but impacts would be largely manageable, according to TA Research.
Ahead of the company’s fourth quarter results for the financial year ended Feb 28, 2026 (4Q26) – which is due to be released this month – the research house said that despite likely leading to a rise in packaging costs, the surge in crude oil prices is estimated to have an insignificant earnings impact of less than 5%.
“As far as shipment is concerned, PGF’s shipment in 1Q26 was not affected,” it said.
“In other words, PGF’s 1Q27 earnings growth would remain intact, considering the three-month inventory PGF always keeps at its warehouses in Australia.”
Consequently, TA Research has revised its raw material cost – including transportation cost – forecast for PGF’s FY27 and FY28 higher by 4.9% and 3.9% respectively, with the assumption that hikes in sea freight and packaging expenses will be felt from 2Q27 onward.
However, the research house is mindful of a potential rise in electricity tariffs, noting that PGF is a high-voltage industrial user and electricity currently makes up one-third of its production costs.
TA Research expects PGF’s earnings for FY26 to rise by about 40% year-on-year, with growth underpinned by robust demand for insulation products.
It opined that PGF’s new plant in Kulim East is timely, as it will raise the group’s annual manufacturing capacity from 25,000 tonnes to 60,000 tonnes, powering future earnings growth.
TA Research estimates that the 4Q26 core profit will range between RM2mil and RM4.5mil, compared to its RM1.9mil loss recorded in the same period last year.
“It is expected to decline seasonally from a core profit of RM7.8mil in the preceding quarter as PGF’s shipments to Australia would likely slow in conjunction with the Christmas and New Year holidays.”
The research house added that PGF’s 50.1%-owned joint-venture company Nexel Group is on track to launch Phase 1 of its project with an estimated gross development value of RM300mil in FY27.
“Upon achieving an 80% take-up rate, which would likely happen in 2027 (FY28), PGF can recognise a land sale gain of RM21mil,” it said.
TA Research has revised down its FY27 to FY28 earnings projections for the group by 1.6% to 3.3% to factor in shipping and packaging cost hikes, while making no changes to its FY26 earnings forecast.
The research house maintained its “buy” rating on PGF with a lowered sum-of-parts valuation to RM2.90 per share from RM2.92 previously, to reflect the changes in earnings predictions.
