TA Research said it is not making any change to its profit projections for financial year 2025 and FY26 .
PETALING JAYA: PGF Capital Bhd
’s (PGF) move to acquire a piece of freehold land of about 30 acres within the Kulim East Industrial Park is a timely expansion to meet the rising demand for its products and for future expansions.
TA Research said in a report the expansion of capacity by more than double is crucial to deal with the overwhelming demand for its products.
The company manufacture of glass mineral wool products for insulation and has interests in agriculture and property.
It said PGF’s existing capacity has been fully used up to meet strong sales to the Australian and New Zealand housing markets to comply with the stringent green and sustainable housing policies.
“As such, we are positive about the land purchase as it not only resolves issues relating to capacity shortages but is also big enough to cater for its future expansions,” the research house added.
PGF entered into a sales and purchase agreement to acquire the piece of freehold land, measuring approximately 30 acres within the Kulim East Industrial Park for RM40mil in cash or RM38 per sq ft earlier this month.
The land is located approximately 30 minutes from PGF’s existing plant in Perai and 45 minutes from Penang Port.
“At RM40mil or RM38 per sq ft, the purchase consideration is relatively cheap compared with other industrial land in Kulim East, where the average asking price is between RM48 and RM60 per sq ft.
“As far as funding is concerned, the company has net cash of RM9.6mil as of May 31, 2024, showing ample debt headroom to finance the entire capital expenditure requirement of RM200mil for land, building, plant and machinery as well.
“On top of that, the conversion of warrants by the founder on June 24 also contributed to additional cash of RM10mil,” the research house said.
Maintaining its “buy” call on the stock, TA Research said it is not making any change to its profit projections for financial year 2025 (FY25) and FY26 .
“We introduce our FY27 earnings forecast of RM65.6mil with an earnings before interest and taxes (Ebit) mix of 48% and 52% from the insulation and property divisions, respectively,” the research house noted.
PGF’s net profit stood at RM6.7mil in the first quarter of financial year 2025 (1Q25) from RM3.9mil in the same quarter of the previous year. It achieved revenue of RM40.51mil with earnings per share of 4.06 sen.
By category, the group’s insulation segment remained the core revenue generator, accounting for 99.5% of total revenue. The remaining business segments had negligible impact on overall performance.
The group’s net assets per share increased to RM1.41 from RM1.29 at the end of the preceding financial year.
