PETALING JAYA: Despite PGF Capital Bhd
’s earnings growth in the first half ended Aug 31, 2026 (1H27), rising cost pressure could weigh on performance in 2H27, according to TA Research.
Following its second quarter (2Q27) results, the research house said it is making no changes to its conservative earnings forecasts for PGF, and keeping its “buy” call on the stock as well as sum-of-parts based valuation of RM2.70 per share.
In 1H27, PGF’s core profit rose by 5.7% year-on-year (y-o-y) to RM15.6mil, supported by higher revenue which increased 8.1% y-o-y to RM92.9mil.
TA Research attributed the improved revenue to robust demand for glass wool insulation products and cost-push price increases.
Additionally, PGF saw core profit expand by 5.1% quarter-on-quarter in 2Q27, underpinned by a 12.4% rise in revenue.
“The earnings growth can be attributed to strong Australian demand for glass wool insulation products,” said TA Research.
While the 1H27 core profit figure represents 69.3% of its full-year forecast, TA Research said the performance still fell within its expectations after factoring in increasing cost challenges in 2H.
“1H27 adjusted pre-tax profit margin was little changed at 23%, justifying that some degree of electricity cost pass-through to its customer during the period,” it said.
It also noted that the group has begun discussions with its customers concerning a potential gas price rise in Malaysia.
“However, we do not think this would be easy as Australian builders, PGF’s key customers, are also facing cost pressures from other building materials, particularly fuel and steel,” it opined.
Meanwhile, TA Research remains constructive on PGF’s housing projects in Tanjung Malim, despite an ongoing water supply issue, citing growing investments in industrial and hi-tech parks in the area which should bode well for residential housing demand.
It further highlighted that the relatively low land cost, estimated at RM3 per sq ft, should result in substantial profit margins for the group.
In addition, PGF’s new Kulim East plant is expected to commence production after the installation of electricity and gas facilities next month.
With the new plant, total production capacity is expected to increase to 65,000 tonnes per year from 25,000 tonnes per year currently, though TA Research noted that the ramp-up is likely to come gradually in phases.
