KUALA LUMPUR (Jan 30): Glass mineral wool insulation maker PGF Capital Bhd’s net profit jumped to RM2.03 million for its third quarter ended Nov 30, 2022 (3QFY2023), 52 times the RM39,000 it made in the preceding year’s corresponding quarter, thanks to higher production output and higher sales revenue from its insulation business.

Revenue grew 31.29% to RM17.75 million from RM13.52 million, its Bursa Malaysia filing showed. Earnings per share rose to 1.25 sen from 0.02 sen.

The insulation segment, its main revenue contributor, contributed RM17.36 million or 97.8% of 3QFY2023’s revenue, with a profit before tax of RM3.03 million.

The group is also in property development, which reported no revenue but incurred a loss before tax (LBT) of RM241,000. It is also involved in agriculture — the planting of tropical fruits such as durian — and freshwater aquaculture activities under its ‘others’ segment, which registered a LBT of RM510,000, mainly due to agriculture expenditure incurred before harvesting.

For its nine months ended Nov 30, 2022, the group made a net profit of RM11.16 million, almost 11 times the RM1.04 million it made in the year-ago corresponding period, as revenue grew 62.31% to RM66.14 million from RM40.75 million.

On prospects, the group is cautiously optimistic that its insulation and related products segment, which will continue to drive its profit, will perform stably in the remainder of FY2023.

“Although the inflationary pressure on raw material has eased, the removal of electricity subsidy by the Malaysian government for industrial customers and the increase of natural gas price have put significant pressure on production costs.

“However, the impact is softened by continuous drop in ocean freight that has helped to ease the cost pressure on our Oceania markets. The company will continue to optimise its production output and cost to remain competitive in the market, especially as we are expanding our footprint in Australia,” it said.

“In line with our plan to increase our market share in the Oceania region, we have secured the leases of multiple warehouses in strategic locations across major cities in Australia through our wholly owned subsidiary PGF Insulation Pty Ltd which was incorporated in Australia in May 2022,” PGF Capital’s executive chairman Fong Wern Sheng said in a statement.

The group believes demand from the Oceania region will “continue to be strong”, due to revisions to the National Construction Code in Australia and the Building Code in New Zealand, which require more insulation to achieve higher energy efficiency ratings for their buildings. “This bodes well for PGF’s expansion plans in the region,” Fong said, adding the group has set up its regional headquarter in Melbourne, Australia to be closer to the Oceania market.

Meanwhile, the group’s property development business, which is undertaken via Golden Approach Sdn Bhd that owns about 1,311.15 acres of leasehold land in Tanjong Malim, Perak, expects to launch a project there this year.

As for its agriculture business, its Diamond Creeks Aquatech Sdn Bhd manages a 50-acre freshwater aquaculture centre as well as a tropical fruits plantation on 200 acres of land, with cash crops such as kumquat and passion fruit expected to be harvested in the next financial year.

At 3.50pm, PGF Capital was trading at RM1.42, up one sen or 0.7%, giving the group a market capitalisation of RM231 million.