PETALING JAYA: PGF Capital Bhd
is expected to deliver another quarter of resilient earnings this month which will likely be supported by sustained demand for its glass wool insulation products.
Although its earnings could still be somewhat affected by higher production costs from rising fuel prices.
TA Research expects the group’s first quarter ended May 31, of financial year 2026 (1Q26) core net profit to come in at between RM6mil and RM8mil, representing 26% to 34% of its revised full-year earnings forecast.
It said revenue should remain stable, underpinned by robust demand from Australian customers for glass wool insulation products.
However, TA Research noted profitability is likely to come under pressure as higher fuel prices have increased packaging and electricity costs.
“The group should be able to pass on part of these higher costs to customers as the cost pressures are affecting glass wool manufacturers across the region,” the research house said.
Meanwhile, the commissioning of PGF’s new manufacturing facility in Kulim has been delayed and is now expected to begin operations in September, during 3Q27, instead of the 1Q27 as initially anticipated.
The delay was attributed to utility companies requiring additional time to complete electricity and gas installations for the plant.
As a result, TA Research lowered its utilisation rate assumption for the expanded production capacity of 65,000 tonnes to 50% for financial year 2027 from 62% previously.
The research house also warned that production costs could face further pressure following the recent surge in liquefied natural gas (LNG) prices.
According to management, the Malaysia Reference Price (MRP) for LNG is expected to increase by more than 40% in 3Q27 because of a six- to seven-month lag effect, exceeding TA Research’s earlier assumption of RM40 per gigajoule.
Nevertheless, the research house believes the higher gas prices will be temporary, following the recent correction in crude oil and LNG prices, and expects the MRP to ease back to RM40 per gigajoule from 1Q28 onwards.
On the property front, TA Research said progress continued at PGF’s joint venture development in Perak.
It also lowered its sum-of-parts target price to RM2.73 per share from RM2.90 per share previously but maintained its “buy” recommendation, saying the impact of the Iran conflict and elevated production costs should be short-lived and that PGF’s long-term fundamentals remain intact.
