PGF: Optimistic Financial Forecasts on Strong Demand and Strategic Initiatives

TA SECURITIES anticipates robust financial performance for a prominent company in the building materials sector, with the firm projected to report a strong second quarter for FY26. Preliminary estimates suggest a quarterly profit ranging between RM6 million and RM9 million, which would boost first-half FY26 profits to RM15 million-RM18 million. This represents a substantial 42-51% of the full-year FY26 earnings projection and follows resilient earnings in the first quarter of FY26.

Performance Drivers and Challenges

The continued strong demand for glass wool insulation products, particularly from Australia, is identified as a key driver of the company’s resilient earnings. Management has indicated that the impact of US tariffs on exports remains minimal, posing no significant threat to the group’s performance. However, growth in 2QFY26 earnings is expected to be modest due to existing capacity constraints.

Regarding the Kulim East plant expansion, construction is currently a month behind schedule due to manpower issues, though the delivery of machinery and equipment remains on track. Completion is still slated for end-November, and management expresses confidence in catching up on the delay to meet the 1QFY27 commencement date.

Strategic Growth Catalysts

A significant long-term growth catalyst for the company’s property development division is the confirmed investment by BYD Malaysia. BYD plans to establish a local assembly plant in Tanjong Malim, situated within KLK TechPark. This development is expected to expedite crucial infrastructure development in the area, notably resolving long-standing water supply issues that have previously delayed the company’s property launches.

The company has secured conditional approval for its first joint venture property project in Tg. Malim. This development is crucial, with the group poised to recognize an immediate land sales gain of an estimated RM21 million upon achieving an 80% take-up rate. Approximately RM9.8 million (or about 45% of this gain) has already been partially factored into FY26 projections. The company’s extensive landbank in Tg. Malim, boasting an undeveloped Gross Development Value (GDV) of RM3.0 billion and situated just a 14-minute drive from the new BYD plant, positions it advantageously to cater to the anticipated surge in housing demand from BYD employees and suppliers.

Analyst Outlook

TA SECURITIES has maintained its “BUY” recommendation for the company, affirming a target price of RM2.99 per share. The firm highlights the company’s sum-of-parts valuation at RM2.99/share and an unchanged ESG rating of three stars, reiterating ample room for growth. The investment bank believes the company is well-positioned to benefit significantly from the economic ripple effect of BYD’s strategic investment in Tanjong Malim.