PGF: Property Development Set to Drive Future Growth Amid Stable Insulation Demand
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
PGF Capital is strategically positioning itself for significant future growth, primarily through its property development segment, while its core glass wool insulation products business continues to demonstrate robust demand. The company is actively engaged in resolving a crucial water supply issue, a key step expected to unlock substantial value from its landbank and enhance overall profitability.
Performance & Market Dynamics
For the third quarter of fiscal year 2026 (3QFY26), PGF Capital anticipates its quarterly profit to be largely unchanged from the RM5.9 million recorded in 2QFY26. This stability is underpinned by consistent strong demand for its glass wool insulation products, particularly in Australia. Despite this, overall profitability continues to experience pressure from the strengthened Malaysian Ringgit over the past year, although the Ringgit-Australian Dollar exchange rate remained flat quarter-on-quarter in 3QFY26. TA Securities has maintained its earnings projections for PGF Capital for FY26 through FY28.
Unlocking Property Development
A pivotal focus for PGF Capital is the resolution of a water shortage issue affecting its property development in Tg. Malim. Discussions with Lembaga Air Perak (LAP) are set to commence shortly after the submission of a comprehensive water concept plan. This plan involves PGF Capital investing approximately RM5-6 million in water pipe infrastructure, a necessary step to enable the launch of Phase I of the project. Management expects to submit the housing development plan once the water issue is resolved, with project approval anticipated within six months.
Future Outlook & Strategic Value
The company’s 50.1%-owned joint venture, Nexel Group, is on schedule to launch Phase I of the Tg. Malim project, which boasts an estimated Gross Development Value (GDV) of RM300 million in FY27. Achieving an 80% take-up rate, projected for FY28, could lead to PGF Capital recognizing a land sale gain of RM21 million. This property development is crucial for bolstering the group’s future profitability and enhancing share price performance, leveraging cheap land costs and potential tax credits. Despite past share price underperformance attributed to delays in property project initiation, successful resolution of the water issue and subsequent development approval are expected to propel the company back onto a growth trajectory.
Investment Recommendation
TA Securities maintains its “Buy” recommendation for PGF Capital, reaffirming an unchanged sum-of-parts (SOP) valuation of RM2.92 per share. The investment bank also upheld the company’s ESG rating at three stars (★★★).
