► TA SECURITIES
A MEMBER OF THE TA GROUP
RESULTS UPDATE
Tuesday, July 29, 2025
FBMKLCI: 1,529.38
Sector: Building Material
Tuesday, July 29, 2025
FBMKLCI: 1,529.38
Sector: Building Material
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
PGF Capital Berhad
Decent Margins in 1QFY26
TP: RM2.99 (+72.6%)
Last Traded: RM1.73
Review
- PGF Capital’s (PGF) IQFY26 core profit of RM8.8mn was in line with expectation at 25% of our full-year forecast.
- IQFY26 core profit expanded by 36.7% YoY on the back of margin expansion. For this quarter, the revenue was little changed at RM40.6mn as the growth was crippled by capacity constraints. PGF’s existing plant operated at near full utilisation while the new facility in Kulim East remains under construction. Meanwhile, the margin improvement was supported by strong pricing for glass wool insulation products, which more than offset a production decline following a gas pipeline explosion in Putra Heights. This incident led to a temporary reduction in gas supply, affecting manufacturing operations. According to management, IQFY26 revenue and profit could have been stronger if not for the disruption in gas supply.
- QoQ, the group turned around from a core loss of RM1.9mn as 4QFY25 quarterly profit was affected by seasonally weak demand and exorbitant tax rate at 146% in the previous quarter. For this quarter, the effective tax rate had normalised to 22%
Impact
- No change to our FY26-27 earnings projections.
Outlook
- The new plant in Kulim East has progressed smoothly and completed 50% of piling works. This plant, which has been granted a 5+5 years of corporate tax holiday, is scheduled for completion by 4QFY26. As far as SST is concerned, the impact is expected to be insignificant as the group has awarded all construction jobs prior to the SST implementation.
- On the demand fronts, the recent introduction of a minimum rental standard for ceiling insulation in rental homes by the Victorian government is expected to boost the demand for insulation products. The government also introduced new building electrification regulations and set minimum energy efficiency standards for rental homes, beginning from 1 January 2027, which would likely stimulate the glass wool insulation demand further. On the ASP fronts, we understand the ASP is firm at RM6/kg as the China’s dumping activity is not prevalent in Australia.
Valuation
- We maintain the sum-of-parts valuation (SOP) at RM2.99/share for PGF. Maintain Buy
Share Information
| Bloomberg Code | PGF MK |
| Stock Code | 8117 |
| Listing | Main Market |
| Share Cap (mn) | 194.0 |
| Market Cap (RMmn) | 347.3 |
| 52-wk Hi/Lo (RM) | 1.61-2.32 |
| 12-mth Avg Daily Vol (‘000 shrs) | 387.0 |
| Estimated Free Float (%) | 35.5 |
| Beta | 0.62 |
Major Shareholders (%)
| Fong Wah Kai & family | (64.5) |
Forecast Revision
| FY26 | FY27 | |
|---|---|---|
| Forecast Revision (%) | 0.0 | 0.0 |
| Net profit (RMmn) | 34.9 | 55.5 |
| Consensus | – | – |
| TA’s / Consensus (%) | – | – |
| Previous Rating | Buy (Maintained) | |
| Consensus Target Price (RM) | – | |
Financial Indicators
| FY26 | FY27 | |
|---|---|---|
| Net gearing (x) | 0.3 | 0.4 |
| CFPS (sen) | 14.6 | (0.2) |
| P/CFPS (x) | 11.8 | nm |
| ROAA (%) | 7.2 | 9.4 |
| ROAE (%) | 12.6 | 18.1 |
| NTA/Share (RM) | 1.5 | 1.7 |
| Price/ NTA (x) | 1.2 | 1.0 |
Scorecard
| % of FY | ||
|---|---|---|
| vs. TA | 25.0 | Within |
| vs. Consensus | – | – |
Share Performance (%)
| Price Change | PGF | FBM KLCI |
|---|---|---|
| 1 mth | (1.7) | 0.1 |
| 3 mth | 1.2 | 0.5 |
| 6 mth | (19.9) | (1.5) |
| 12 mth | (21.9) | (5.9) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
Figure 1: SOP valuation
| Valuation Method | Value (RM’mn) | |
|---|---|---|
| Manufacturing | 8x CY26 EPS | 292 |
| Property – Tg. Malim | 50% of RNAV | 227 |
| Property – Kulim | RNAV | 50 |
| Hotel – Kulim | PV (GDV-GDC) | 10 |
| Eco-tourism | Landbank x carring value | 97 |
| Total | 675.2 | |
| Outanding share base (m) | 194 | |
| –> Conversion of ICPS | @ RM0.90 | 41 |
| Enlarged share based (m) | 240 | |
| Fair value exc. ESG (RM/share) | 2.99 | |
| ESG premium | 0% | |
| Fair value/ share (RM) | 2.99 | |
Source: PGF & TA Securities
Figure 2: Earnings Summary (RMmn)
| FYE Feb | FY23 | FY24 | FY25 | FY26F | FY27F |
|---|---|---|---|---|---|
| Revenue | 91.1 | 128.6 | 155.0 | 206.0 | 395.3 |
| EBITDA | 33.6 | 28.6 | 60.4 | 70.9 | 122.5 |
| EBITDA margin (%) | 36.9 | 22.2 | 39.0 | 34.4 | 31.0 |
| Dep. & amor. | (8.8) | (11.4) | (10.9) | (22.7) | (36.8) |
| Net finance costs | (1.1) | (2.9) | (2.6) | (5.4) | (12.6) |
| EI | 9.2 | (3.5) | 15.9 | 0.0 | 0.0 |
| Adj. PBT | 15.1 | 18.9 | 31.1 | 42.8 | 73.0 |
| Tax | (8.0) | (4.9) | (13.1) | (7.9) | (17.5) |
| Net profit | 16.3 | 10.5 | 33.9 | 34.9 | 45.6 |
| Core net profit | 7.1 | 13.9 | 18.0 | 34.9 | 55.5 |
| Core EPS (sen) | 4.3 | 8.5 | 9.7 | 18.0 | 28.6 |
| EPS Growth (%) | >100 | 96.2 | 14.0 | 85.5 | 59.0 |
| PER (x) | 39.9 | 20.3 | 17.8 | 9.6 | 6.0 |
| DPS (sen) | 1.0 | 1.5 | 3.0 | 4.0 | 6.0 |
| Div Yield (sen) | 0.6 | 0.9 | 1.7 | 2.3 | 3.5 |
Figure 3: 1QFY26 Results Analysis (RMmn)
| FYE Feb | 1Q25 | 4Q25 | 1Q26 | QoQ (%) | YoY (%) |
|---|---|---|---|---|---|
| Revenue | 40.5 | 33.7 | 40.6 | 20.5 | 0.2 |
| EBITDA | 12.5 | 23.4 | 13.5 | (42.2) | 7.7 |
| Depreciation & Amortisation | (2.9) | (3.0) | (2.8) | (6.2) | (4.9) |
| Interest costs | (0.7) | (0.6) | (0.7) | 8.9 | (4.6) |
| EI | 0.3 | 15.8 | (1.3) | >-100 | (561.1) |
| Adj. PBT | 8.8 | 4.2 | 11.3 | >100 | 28.1 |
| Tax | (2.4) | (6.1) | (2.5) | (58.9) | 5.1 |
| Net profit | 6.7 | 13.9 | 7.5 | (46.0) | 12.1 |
| Core profit | 6.4 | (1.9) | 8.8 | > | 36.7 |
| Core EPS (sen) | 3.9 | (1.0) | 4.5 | >100 | 16.2 |
| DPS (sen) | 0.0 | 1.0 | 0.0 | nm | nm |
Profitability ratio
| p.p. | p.p. | ||||
|---|---|---|---|---|---|
| EBITDA margin (%) | 31.0 | 69.4 | 33.3 | (36.1) | 2.3 |
| Adj. PBT margin (%) | 21.7 | 12.4 | 27.8 | 15.4 | 6.1 |
| Core profit margin (%) | 15.9 | (5.7) | 21.6 | 27.3 | 5.8 |
| Tax rate (%) | 27.0 | 145.5 | 22.2 | (123.3) | (4.9) |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY: Total return of the stock exceeds 12%.
HOLD: Total return of the stock is within the range of 7% to 12%.
SELL: Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Environmental | Social | Governance | Average |
|---|---|---|---|
| ★★★ | ★★★★ | ★★★ | ★★★ |
| PGF produces glass wool for building insulation, which would effectively lower energy consumption. The use of recycled glass in the production will reduce landfill pollutions. | There are comprehensive employee engagement and development plans in place to nurture the talents within the group. | More than 60% of PGF shares are owned by Fong family where 2 family members hold key BOD positions. The company has adopted a dividend policy of paying a minimum of 25% profit as dividend. |
| ★★★★★ (≥80%) | Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. | +5% premium to target price |
| ★★★★ (60-79%) | Above adequate integration of ESG factors into most aspects of operations, management and future directions. | +3% premium to target price |
| ★★★ (40-59%) | Adequate integration of ESG factors into operations, management and future directions. | No changes to target price |
| ★★ (20-39%) | Have some integration of ESG factors in operations and management but are insufficient. | -3% discount to target price |
| ★ (<20%) | Minimal or no integration of ESG factors in operations and management. | -5% discount to target price |
