13 Sep 2024 PGF Capital Acquires Land in Kulim for Insulation Production capacity Expansion
PULAU PINANG: Main-market listed leading insulation producer in Southeast Asia, PGF Capital Berhad (“PGF Capital” or the “Group”) (stock code: 8117), announced today that its wholly-owned subsidiary, NetZero Technology Sdn. Bhd. has entered into a Sales and Purchase Agreement (“SPA”) to acquire a piece of freehold land measuring approximately 96,720 square metres (equivalent to about 23.9 acres) in Pekan Padang Meha, Kulim, Kedah in a development to be known as “Kulim East Industrial Park” (the “Land”) from Senam Jaya Sdn. Bhd. (“Vendor”) for RM40.0 million (“Acquisition”).
The Land shall be developed in phases. Under Phase 1, a new manufacturing plant will be built to increase the Group’s total annual insulation production capacity by 160% or 40,000 metric tonnes (“mt”), from the existing 25,000 mt to 65,000 mt. Construction of the new plant is slated to commence in early 2025, with commercial operations expected to begin by the first half of 2026. Meanwhile, Phase 2 of the expansion will add a further 20,000 mt of capacity, bringing the total to 85,000 mt, with completion anticipated by the first half of 2028.
The Land is strategically located approximately 30 minutes from PGF Capital’s existing Perai manufacturing facility and 45 minutes from Penang Port, offering logistical advantages for the Group. The Acquisition, to be financed through a combination of internal funds and bank borrowings, is projected to complete within four calendar months from the date of SPA.
Executive Director cum Group Chief Executive Officer, Mr Fong Wern Sheng, shared, “We are excited about the prospects this land offers, given its large acreage, which is sufficient to cater to our expansion needs for the next five years. Its strategic location, with close proximity to both our existing plant and the Penang Port, further enhances its value. We are building additional annual capacity of 40,000 mt to meet the growing demand driven by the global trend towards sustainability and energy efficiency. The increased focus on net zero targets presents significant opportunities for PGF Capital, as insulation plays a crucial role in reducing energy consumption and carbon emissions.”
“At present, our operational expansion is buoyed by the surge in demand for insulation products, particularly in the Oceania market, where Australia’s stringent new energy efficiency building codes have significantly stimulated consumption. Furthermore, this expansion will also position us well to capture opportunities in other regions as demand for energy-efficient building solutions increases. Overall, we are optimistic on our future prospects.”
To recap, PGF Capital has on 17 July 2024 established a strategic partnership with Centria Building Material Manufacturing (Shanghai) Co., Ltd. (“Centria International”), a global leader in advanced building materials, by signing a five-year distribution agreement for Centria International’s mineral wool sandwich panels in Malaysia, targeting industrial and commercial buildings, including data centres. This collaboration is expected to expand PGF Capital’s product portfolio and market reach to drive revenue growth.
“The Group is exploring the possibility to jointly establish a local manufacturing facility with Centria International to produce insulated panels with both glass wool and stone wool cores. This Land in Kulim offers ample space to accommodate such potential expansion, positioning PGF Capital for long-term growth and market leadership in the insulation sector,” he concluded.
