BusinessToday recently spoke to PGF Capital Executive Chairman Fong Wern Sheng exclusively on the course chartered for the company.
When one meets Fong, his traits of being hands-on and having a keen knowledge of his trade stands out. He undoubtedly knows his trade well and does not relent in acquiring new information on every aspect of his industry.
Fong shared that the company, formerly known as Poly Glass Fibre (M) Berhad was renamed as PGF Capital in January this year, signaling a call for diversification of its income stream and a quest for business expansion with a mission to achieve sustainable growth.
In July 2022, PGF Capital reported a net profit that spiked 150 per cent year-on-year for 1QFY2023, with its insulation segment contributing mostly to the higher net profit earned. Asked on what would be the targeted growth for PGF Capital over the next three years, Fong said: “The 150 per cent increase (in net profits) was due to a comparison to a relatively
low base-year caused by the pandemic, the movement control order, disruption of workflow due to quarantines and so forth, which contributed to a low growth rate in 2021.”
He said the company anticipates a steady double-digit annual growth rate in the insulation segment as it embarks on its expansion plans into the Oceania region where its market presence is relatively small currently. This allows the company to have a huge room for growth as the demand for insulation from this region continues be positive as the construction sector is expected to grow.
Fong cited the revision of National Construction Code (NCC) in Australia and of the Building Code in New Zealand, as examples which will contribute to the increase in demand for building insulation materials. In both cases, the implementation of these revisions will come into effect from the middle of 2023.
“These insulation materials are meant to make homes and buildings more energy-efficient.” he added.
As part of the expansion plans into this region, PGF Capital will be setting up three warehouses, the first of which will be in Melbourne.
Fong envisages the Oceania region would be a lucrative target market for PGF Capital due to Australia’s economic stimulus efforts to generate growth to its economy in response to the aftermath of COVID-19.
As part of the stimulus effort in Australia, first time home buyers will be allotted savings of up to AUD55,000 for the purchase. This alone will increase the demand for residential properties, and to the nation’s construction industry.
“Currently, we have a small team in our regional headquarters in Melbourne which is laying the groundwork before we launch into our expansion plan in early 2023. We will then expand the size of our team and presence in other major cities in Australia. This is need to cater to the increase in demand and we expect to see a steady double-digit annual growth a rate,” Fong said.
“We also continue to engage with the relevant authorities and professional bodies in Southeast Asia, even though the adoption of insulation materials in this region is relatively low. We foresee such practices (to use insultation) will eventually be adopted in order to reduce heat in buildings as more countries are working towards a net-zero goal and sustainability measures.”
“At the moment, we are evaluating whether to have a single high-capacity plant or to build two plants with smaller capacities in different geographical regions. We are equipped with the technology and know-how to build both plants, however, I must stress that an in-depth study has to be done diligently on the availability of raw materials, manufacturing costs concerns and proximity to the markets served, before a decision is made as the investment outlay would be over RM100 million,” he said.
Aquaculture and Durian Plantation
PGF Capital entered into a joint-venture agreement with Hong Len Aquatic Sdn Bhd to venture into and manage a hatchery for freshwater aquaculture in Tanjung Malim, Perak. The interest into the project was spurred by the geopolitical crisis in Ukraine and the aftermath caused by the pandemic which raised questions on the issues concerning food security and affordability of the relevant produce.
Golden Approach Sdn Bhd, subsidiary of the group, owns approximately 1,311.15 acres of leasehold land in Tanjung Malim on which the agriculture and aquaculture segments are being nurtured.
In April 2021, 50-acres has been allotted for the purpose of nurturing freshwater aquaculture. This consists of an integrated indoor breeding and grow-out facility to generate a capacity of producing 5 million fish fingerlings per year. This commenced in FYE2022.
Fong said: “The Group has partnered with HLA to venture into supplying freshwater fish fingerlings particularly of the Jade Perch variety.”
“Why freshwater fish? According to the Fisheries Department, the supply of locally produced freshwater fish fingerlings has been decreasing. But there is a projected increase in demand, so, we aim to address this demand,” he added.
The land is ideally located near the Titiwangsa Range which provides abundant high quality fresh water that is needed for the cultivation of fingerlings.
Asked on whether the group is looking into other breeds of fish, Fong said they are considering going into nurturing Empurau as this freshwater fish fetches high prices and high margins.
In line with aquaculture, Diamond Creeks Eco Farm, another subsidiary of the group, has ventured in managing a tropical fruits plantation, primarily focusing on the Musang King durian. The trees have been planted at the plantation in early 2022.
Incorporated on Dec 1, 2020, company is also into other tropical fruits, such as mangosteen, kumquats and the passion fruit, Fong said, adding, the business entails managing the plantation in terms of harvesting, transportation, processing, marketing, sales and distribution of tropical fruits, as well as other related downstream business activities.
Fong also foresees the site being a potential venue for eco-tourism. There are plans underway to realise this potential along with developing a new township, located close to the Behrang Forest Reserve. Both agriculture and aquaculture projects are expected to draw in ecotourism to the area.
Industry Trend and Outlook
On the issues of whether Southeast Asia’s construction sector will improve as labour shortages are being addressed and as the supply and pricing of building materials stabilise, Fong foresees the demand for insulation will recover to pre-pandemic levels. He is optimistic that the group’s insulation segment will improve this year and in 2023.
Fong added that presently, the group earns a bulk of revenue generated by insulation segment. But forecasts that the aquaculture and plantation segment, will contribute a larger share of revenue for the group in seven or eight years from now.
