Results preview

PGF Capital (PGF) will release its IQFY26 results performance end of this month. We expect the quarterly profit to range between RM5mn and RM7mn, accounting for 14% to 20% of our FY26 earnings projections which are expected to be back-end loaded with a lumpy land sale gain in 2HFY26.

In general, we are expecting a robust performance for IQFY26 as the demand for insulation glass wool remains strong. However, the earnings growth would likely be crippled by capacity constraint. On QoQ basis, we expect a turnaround from a core loss of RM1.9mn in 4QFY25, which was affected by the seasonal factor and high tax expense.

Corporate updates

Capacity expansion.

The construction of a new manufacturing facility in Kulim East is progressing smoothly as 50% of the piling works have been completed. This is on track to meet the completion deadline in IQ26 (4QFY26). Orders for machinery and equipment have already been made and deliveries can be expected in 3Q-4Q25.

SST impact and electricity tariff.

The expansion of the scope of SST, effective I July 2025, is not affecting the group as its domestic sales have already been charged with 10% SST, same as most of the supply of raw materials for glass wool production. Likewise for its new plant in Kulim East, the impact is insignificant too as the construction contracts have mostly been awarded before June-25. As far as electricity tariff is concerned, the impact could be positive, albeit minimal, as the average cost of electricity will reduce as the extended off-peak hour is expected to contribute to some cost savings.

Demand remains buoyant.

The recent introduction of a minimum rental standard for ceiling insulation in homes where none currently exists 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 I January 2027, which would likely stimulate the glass wool insulation demand further. On the ASP front, we understand it is firm at RM6/kg as the China’s dumping activity is not prevalent in Australia.

Forecast

We fine-tune our FY26-27 earnings projections lower by 2.4-2.6% after incorporating FY25 audited accounts into forecast.

Valuation

Rolling forward the valuation base year to CY26, we adjust PGF’s sum-of-parts valuation (SOP) lower by Isen to RM2.99/share for PGF (Figure 1), with an unchanged ESG rating of ★★★. Maintain Buy

Income statement & Ratios