Executive Summary
Largest manufacturer of butt weld fittings and welded pipes in Malaysia, commanding 16% market share in the Malaysian stainless steel welded pipes market and 66% of the export market for butt weld pipe fittings. PGLOBAL serves customers both locally and across 27 foreign markets.
Earnings are expected to demonstrate stable growth in the future, with a two-year CAGR of 13.2%, driven by higher sales volume from existing and new customers, as well as improved cost efficiency.
We recommend subscribe to PGLOBAL IPO with a target price of RM0.82 (a 20.6% potential capital upside from the IPO price), based on a P/E multiple of 11x, pegged to the FY26F core EPS of 7.5 sen.
Key Investment Highlights
Steady sales from long-standing relationship. Pantech (PGLOBAL) has consistently generated >RM35m in earnings from produces and supplies steel PVF, command two-year CAGR 13%, thanks to its strong market position >20 years and brand recognition under brand “Pantech”. ~70% of PGLOBAL’s FY24 sales were generated from top five customers – majority having >20 years of working relationship with the Group. Sales volumes in FY24 remain >30,000 tonnes, though steel price have rebound with lowest low, underscoring PGLOBAL’s market presence.
Expansion plan. The Group operates two operational facilities in Johor and Klang with a total capacity of 50,410 tonnes/annum, achieving a utilisation rate of 69%, running near full optimisation as of FY24. To meet growing demand, it plans to (i) add a new pickling facility and build a single-storey warehouse in Johor, and (ii) add a new office and factory, along with purchasing new machinery and equipment for the Klang plant. These expansions are expected to boost total manufacturing capacity by c.6%, bringing it to 53,410 tonnes/pa. The first expansion is slated for commissioning by 4QCY26, with the remaining expected to be operational by CY27. PGLOBAL intends to purchase the land and buildings of the existing Klang factory, as well as two parcels of land at the existing Johor factory, from the holding company, Pantech Group Bhd. The acquisition is expected to be completed within 3 months from the date of the listing.
Riding the wave of US O&G capex and policy support for expansion. PGLOBAL is poised to grow alongside the development of fossil fuel infrastructure under the Trump administration, which aims to prioritise domestic oil production as a key part of its energy strategy. To address concerns over high energy prices, Trump administration plans to promote more leasing on federal lands and encourage US companies to drill. In addition, Petronas is set to construct three offshore central processing platforms and install approximately 900 km of pipelines under its 2025-2027 Activity Outlook. Meanwhile, CIR2030, which focuses on moving towards ESG-friendly and higher-value specialty chemicals, serves as a catalyst for sustained investment in facility maintenance, upgrades, and new plant development. As a critical supplier of piping and equipment, as well as the sole manufacturer of elbows and long bends using the HFI (High Frequency Induction) process in Malaysia, PGLOBAL is well-positioned to capitalise on this growth, which is expected to drive increased demand for its products in the long term.
Attractive c.4% dividend yield. Historically, PGLOBAL has declared annual dividends averaging >4 sen, with dividend payout ratios of 18%/32%/142% for FY22–FY24. The Group targets a dividend payout of 40%–50% of its PAT. By conservatively applying 40%, this translates to yields of 4.0%/4.4% for FY25F–FY26F, which is decent for a growth. In light of the current economic situation, coupled with the uncertain environment, PGLOBAL's valuation is undemanding, considering its attractive and generous dividend yield of >10-year MGS 3.8%, providing sustainable cash flow for shareholders.
Valuation & Recommendation. We recommend subscribe to PGLOBAL with a target price of RM0.82 (a 20.6% potential capital upside from the IPO price), based on an 11x P/E ratio pegged to FY26F EPS of 7.5 sen. The valuation is premised on its listing PER. We believe the assigned P/E is justified, as it is based on PGLOBAL’s position as a market leader in the field and its solid growth prospects.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.400379 | 4.430934 |
| EUR | 4.814360 | 4.819033 |
| CNY | 0.609971 | 0.610580 |
| HKD | 0.566392 | 0.570331 |
| SGD | 3.304308 | 3.327507 |