01 Sep 2025 PGF goes beyond insulation business
Source: https://www.thestar.com.my/business/business-news/2025/09/01/pgf-goes-beyond-insulation-business
PGF Capital Bhd , a Penang-based company, has diverse businesses.
While manufacturing building insulation is its core and generates respectable profits, its large tract of land near Proton City in Tanjong Malim, Perak, is a longer-term investment.
PGF also engages in small property projects, along with agriculture and aquaculture, though these are in their infancy.
PGF listed on the Main Market of Bursa Malaysia in 1990. The company now trades at a price-to-earnings ratio of 10 times, giving it a market capitalisation of RM310.32mil.
The company is ramping up production for its mainstay insulation business through a new facility in Kulim, Kedah. The facility will begin production in April next year, tripling PGF’s current output.
PGF – a manufacturer of glass mineral wool insulation – is gearing much of this expansion to meet surging demand in Oceania markets, especially Australia and New Zealand.
PGF has a 10% market share in Australia.
Chief executive officer Fong WernSheng tells Starbiz7the aim is to more thandoublethat.They have grown their New Zealand market share from 4% three years ago to 8% at present.
The additional production volume will allow the group to re-enter markets such as India, Indonesia, Vietnam and the Middle East. The group exited these markets a few years ago due to capacity constraints at its Perai plant.
While insulation requirements in these countries may not be as stringent as Australia and New Zealand, Fong says governments are progressively tightening their building codes in line with sustainability goals.
The bulk of PGF’s revenue comes from Australia and New Zealand, accounting for about 70% of the group’s sales. The remainder is derived from Malaysia and Singapore.
Demand from these Oceania countries is driven by stringent insulation regulations. Unlike Malaysia, every building in Australia and New Zealand is required to have insulation.
Moreover, Fong notes, landlords in some parts of Australia cannot rent out houses that fail to meet the minimum energy efficiency standards, including the ceiling insulation requirement.
“The state of Victoria will be implementing mandatory ceiling insulation effective July 1, 2027 before a property can be leased,”he says.
PGF has secured long-term contracts (two to three years) with major builders in Australia, primarily in the residential sector. This channel generates 30% to 35% of the group’s sales. The company has four distribution hubs in Australia.
Climate also influences insulation demand across Oceania markets, as Australia and New Zealand experience four-season weather.
“During summer people want to keep the heat out of their homes, while in winter, they want to keep the warmth in to save on heating costs. On average, a typical house in Australia has 400kg to 500kg of insulation encapsulating the whole house – roof, ceiling, external walls and even under the floor.
“With Malaysia’s weather, however, most homes only have roof insulation to keep the heat out,” Fong says.
That said, demand for insulation in Malaysia may be spurred by the enforcement of the Energy Efficiency and Conservation Act 2024 (Act 861) from January, which mandates energy management standards and performance standards for selected commercial and industrial buildings, including large offices, hotels and hospitals.
As the push for energy-efficient building solutions accelerates, glass mineral wool produced by PGF is increasingly favoured for its affordability and ability to meet green standards. About 80% of the group’s glass mineral wool is sourced from recycled glass.
PGF also plans to venture into mineral wool sandwich panels through its partnership with China-based Centria Building Material Manufacturing (Shanghai) Co Ltd.
PGF has a five-year exclusive distributorship agreement with Centria for the latter’s mineral wool sandwich panels in Malaysia.
“Currently, we are distributing these panels to better understand the market and the product, whose core material can be the glass wool we produce.
“If viable, we may consider setting up a mineral wool sandwich panel production line at our new Kulim plant,” he says, adding that PGF’s long-term plan is to supply the panels to modular housing fabricators as it offers good insulation and is quick to install.
Another jewel in PGF’s portfolio is its 1,311 acres of land in Tanjong Malim next to the Automotive High-Tech Valley (AHTV) in Proton City.
The group has outlined a 10-to 15-year master plan to unlock the value of the land, by developing an agrotourism-themed integrated township, dubbed Diamond Creeks Country Retreat.
The success of the township largely depends on the fortunes of the AHTV project. Recent developments point to growing momentum in the area.
Earlier this month, Proton said its first dedicated electric-vehicle (EV) production plant in Tanjung Malim is set to begin operations in September, six months after the groundbreaking ceremony.
Adding to that, Chinese EV manufacturer BYD announced last week that it will establish its automotive assembly plant there.
“The industrial developments at AHTV and KLK TechPark are expected to drive strong demand for housing in the area.
“Whileweplantosupply our insulationproducts for theseprojects,PGF’s primarygrowthdriver in Tanjung Malim remains property development,”Fong says.
The group is roping in Malvest Properties Sdn Bhd, to develop the township. Malvest, a Penang-based propertydeveloper active sincethe 1990s,has developed severalcondominium projects in the state.
For Phase 1, PGF acts mainly as a land provider, monetising through land sales, while Malvest handles development, construction and marketing of 1,800 residential units and commercial properties. Subsequent phases will be developed through PGF’s 50.1%-owned JV company, while Malvest and several other individuals hold the remaining 49.9%.
Fong says the company has received conditional approval for Phase 1, with full approval expected in three to four months.
PGF is also pursuing a mixed-use property development in Kulim Hi-Tech Park, having bought 9.6 acres of freehold land there for RM12.7mil.
The project, in partnership with Malvest, has a gross development value of RM600mil.
As for its agriculture and aquaculture segments, Fong says the group has planted about 200 acres of durian trees in Tanjong Malim, with harvest expected in two years. It has also started small-scale fish farming to complement its agrotourism plans.
PGF enjoyed a bumper profit of RM34mil in the financial year ended Feb 28, 2025, but it was largely driven by reversal of impairments.
The company reported a healthy first quarter profit of RM7.5mil for the quarter ended May 31, 2025, but guided towards softer full-year results as operations were slightly impacted by gas supply disruptions caused by the Putra Heights incident earlier this year.
