Latest news with #SouthernCable
The Sun
2 days ago
- Business
- The Sun
Southern Cable in line to win MRT3 deals: Apex Securities
KUALA LUMPUR: Southern Cable Group Bhd is well-positioned to secure a substantial share of the MRT3 cable supply package, building on its strong track record in MRT2, comprehensive product range, and established market leadership. In a recent report, Apex Securities Bhd estimated that, assuming a cable supply package valued at RM600 million, with 60% market share and a blended gross profit margin of 15%, Southern Cable could generate RM54 million in gross profit from MRT3—equivalent to 25% of the research firm's FY25 forecast. 'This would provide a meaningful uplift to earnings visibility over the medium term,' Apex said. The MRT3 project has received final approval from the Transport Ministry, enabling the land acquisition process to begin. The project is targeted for completion by end-2026. The MRT3 Circle Line will span 51km, comprising 31 stations. Construction is scheduled to begin in 2027, with full operations expected by 2032. In rail infrastructure projects, cable supply contracts are usually split across several key work packages including power supply systems, signalling and control systems, track works, and station components. As a reference point, MRT2, which spans 52.2km with 36 stations, has a total project cost of RM56.9 billion. Cable supply contracts for MRT2 were estimated at around RM550 million, according to market sources. 'Given the comparable scale of MRT3, we estimate the cable supply package to be valued at RM600 million,' Apex added. In light of MRT3 and other infrastructure rollouts such as the Penang LRT, Apex Securities has revised its earnings forecasts upward by 9.5% for FY26 and 18.5% for FY27. The research firm noted that cable orders for large infrastructure projects are typically distributed across multiple packages and subcontractors. This results in staggered purchase orders, rather than a single lump-sum entry in Southern Cable's order book. 'We raise our price-earnings (PE) multiple from 15x to 17x to reflect Southern Cable's improving earnings visibility and robust growth outlook. 'Valuation remains attractive, with a price/earnings-to-growth (PEG) ratio of 0.4x, based on our projected EPS compound annual growth rate (CAGR) of 33.9% for FY24–27. 'Our revised target price of RM2.14, up from RM1.72, is based on a 17x FY26 EPS of 12.6 sen, and supported by a three-star ESG rating. 'We maintain a 'Buy' call on Southern Cable. We remain positive on the company, given its position as a proxy for Malaysia's rising power demand, growing need for high-voltage power cables, and export exposure to the US market,' Apex Securities concluded.
The Star
11-06-2025
- Business
- The Star
Southern Cable robust earnings momentum intact
PETALING JAYA: Southern Cable Group Bhd is expected to maintain its strong earnings momentum into the remainder of the financial year ending Dec 31, 2025 (FY25), backed by robust demand, high production utilisation and a healthy order book. For the first quarter ended March 31, 2025 (1Q25), the group had posted a net profit of RM27.4mil and a revenue of RM390.81mil. This was up from RM14.07mil and RM312.03mil, respectively, in the same quarter of the previous year. Hong Leong Investment Bank (HLIB) Research said the group kicked off FY25 on a strong note, citing its 1Q25 core profit after tax of RM29.1mil which had surpassed its expectations and accounting for 29% of its initial full-year forecasts. The earnings outperformance was mainly driven by the faster-than-expected commissioning of an additional 3,000km per year cable manufacturing capacity. HLIB Research noted that Southern Cable continues to guide for strong cable demand from Tenaga Nasional Bhd (TNB), data centres and solar, while also indicating no disruption to the delivery schedule for its US clients despite the announcement of reciprocal tariffs. 'Demand for cables remains robust, with the expanded 3,000km per year capacity now largely taken up, as reflected by the strong 90% utilisation rate in 1Q25. 'Supported by a robust RM1.32bil order book and over RM1bil in tenders, management expects this buoyant utilisation to persist,' said the research house. Notably, the group is transitioning to a new long-term contract with TNB in the next quarter, which is expected to yield slightly better margins due to improved pricing terms. In the export segment, it was noted that early discussions suggest that US customers are prepared to absorb the tariff with no impact towards the group's margins. HLIB Research projects US sales to remain steady at RM30mil per quarter throughout FY25, meeting the full-year target of at least RM100mil. Meanwhile, the launch of the stock's new USE-2/RHW-2 low-voltage aluminium power cable has been delayed to 4Q25 due to certification delays. 'We believe the launch of this product will serve as a key catalyst, potentially enabling Southern Cable's US sales to exceed the RM30mil quarterly run-rate,' it added. On the expansion front, the remaining 2,000km per year capacity is expected to come online by end-FY25. The group's new polyvinyl chloride plant is also slated for commissioning in the second half of the year, while construction is ongoing at its Lot 21 and Lot 22 facilities, which are expected to contribute from the second half of FY26. Reflecting the strong outlook, HLIB Research has raised its earnings forecasts for FY25 to FY27 by 8%, 7% and 17% respectively. The research house has a 'buy' rating on the stock with a raised target price of RM1.69 apiece, adding that it believes Southern Cable is well-positioned to capture further market share amid growing infrastructure and energy demand.
New Straits Times
11-06-2025
- Business
- New Straits Times
HLIB starts coverage on Southern Cable with positive outlook
KUALA LUMPUR: Hong Leong Investment Bank (HLIB Research) has initiated full coverage on Southern Cable Group Bhd, highlighting the company's solid operational performance over the past two years, growing institutional interest and bright earnings outlook. The firm raised the earnings estimates for Southern Cable for financial years 2025, 2026 and 2027 (FY25/FY26/FY27) by 8.0 per cent, 7.0 per cent and 17 per cent, respectively. It stated that the notable increase in the FY27 sales forecast primarily reflects the anticipated contribution from the company's Lot 21 and Lot 22 production facilities. Concurrently, HLIB Research initiated a "buy" call and a higher target price of RM1.69 per share from RM1.55 previously, based on a multiple of 18 times fully diluted FY25 earnings per share (EPS) of 9.4 sen. The firm said Southern Cable's current order book stands at RM1.32 billion, equivalent to 0.98 times FY24 revenue coverage. This includes RM792 million in long-term contracts with utility companies, with the rest made up of purchase orders. "Demand for cables remains robust, with the expanded 3,000 km per year production capacity now largely taken up, as reflected by the strong 90 per cent utilisation rate in the first quarter of the financial year 2025 (1QFY25). "Supported by a robust RM1.32 billion order book and over RM1 billion in tenders, management expects this buoyant utilisation to persist," the firm said. HLIB Research added that the company expects strong utilisation to continue, backed by its RM1.32 billion order book and over RM1 billion in tenders. For Tenaga Nasional Bhd sales, management anticipates maintaining a similar run rate in the next quarter. This period will also see a key transition from the old 1+1 long-term contract to a new one, expected to support slight margin improvements from better pricing. In the private sector, order enquiries for medium-voltage and high-voltage cables remain strong, driven by demand from data centre and East Coast Rail Link (ECRL) projects. In the solar segment, the group is currently fulfilling projects under the Corporate Green Power Programme (CGPP), with fifth large-scale solar (LSS5)-related demand expected to pick up in the second half of this year. HLIB Research also said that Southern Cable's sales in the United States continue as usual, with no disruptions expected despite the recent announcement of reciprocal tariffs. As one of the customer's top three suppliers, early discussions have indicated that the US customer is prepared to absorb the additional tariffs — reportedly as high as 24 per cent — without impacting Southern Cable's margins. Meanwhile, the remaining 2,000 km a year capacity expansion planned for FY25 will come online by end-FY25, following the installation of new lines. With regards to the new polyvinyl chloride plant, installation is currently underway, with commissioning scheduled for 2HFY25.
New Straits Times
30-05-2025
- Business
- New Straits Times
Southern Cable likely frontrunner for next wave of data centre cable jobs
KUALA LUMPUR: Southern Cable Group Bhd is poised to clinch a major share of the next wave of power cable contracts linked to at least 10 electricity supply agreements (ESAs) for data centre projects, said an analyst. This follows Tenaga Nasional Bhd's (TNB) recent announcement of five signed ESAs for data centres totalling 666 megawatts (MW) in the first quarter of this year, with another 10 contracts expected to be signed by year-end. Apex Securities analyst Tan Sue Wen said the surge in demand for medium- and high-voltage (MV and HV) power cables is expected to benefit Southern Cable, which operates in a segment with limited competition. "With its entrenched position in the MV and HV cable segments, and limited competition in this space, Southern Cable is well-positioned to capture a large portion of these upcoming infrastructure opportunities," she said in a note. Besides its role in domestic infrastructure, Tan said Southern Cable is also seen as a beneficiary of United States-bound exports, being one of the few local cable suppliers with distribution access to the American market. Apex Securities has raised its earnings forecast for Southern Cable by 21 per cent across financial years 2025 to 2027, citing robust margin expansion and resilient demand for power cables. The group's power segment, which accounts for the bulk of its revenue, saw gross profit more than double year-on-year in the first quarter ended March 31, 2025, as demand for MV and HV cables surged. These products made up over 30 per cent of the segment's revenue during the quarter, according to the research firm. Excluding a one-off forex loss, core net profit rose 113.7 per cent to RM29.1 million in the quarter, accounting for 28 per cent of the full-year forecast, a performance it described as exceeding expectations. "We expect stronger performance in the remaining quarters of the financial year. The outperformance was largely due to stronger-than-anticipated margins of power cables and wires in the power segment," it said. Southern Cable has RM1.3 billion worth of orders in hand, about 90 per cent of which are for power cables, which Apex Securities believes provides solid earnings visibility for the rest of the year. In line with the revised earnings outlook, the firm raised its target price for the group to RM1.72 from RM1.42 and reiterated a 'Buy' call, noting the stock's undemanding valuation at 12 times 2025 forecast earnings. "Risks to the outlook include a spike in raw material prices such as copper and steel, and the potential failure to secure new contracts," it added.
