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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
4 days ago
- New Straits Times
Solarvest's Brunei project could generate RM100mil via JV, says HLIB
KUALA LUMPUR: The solar project secured by Solarvest Holdings Bhd in Brunei is expected to deliver up to RM100 million in value to its 49 per cent-owned joint venture, according to Hong Leong Investment Bank (HLIB Research). Solarvest secured a 25-year power purchase agreement (PPA) through its 34 per cent-owned joint venture (JV), Seri Suria Power (B) Sdn Bhd. The agreement, inked with Brunei's Department of Electrical Services, will see the JV build, own and operate a 30 MWac ground-mounted photovoltaic (PV) plant atop a remediated landfill in Kampong Belimbing, Kota Batu. Commercial operations are expected to begin by the end of the calendar year 2026, with construction scheduled to start in the third quarter of 2025. Seri Suria Power is a partnership between Solarvest and local entities Khazanah Satu Sdn Bhd — a Bruneian government investment arm under the Finance Ministry — and Serikandi Oilfield Services Sdn Bhd, an energy and infrastructure service provider. HLIB Research said in a note the engineering, procurement, construction, and commissioning (EPCC) scope is expected to deliver between RM80 million and RM100 million in value to Solarvest's 49 per cent-owned EPCC JV, expanding its existing RM1.2 billion order book. "Capital expenditure for the plant is projected at B$35 million (about RM116 million) and should have minimal balance sheet impact considering equity funding required from Solarvest amounts between RM7 million and RM10 million. "Meanwhile, our preliminary project internal rate of return estimation could come in the 'high single digit' range – a reasonable figure, in our view," the firm said. HLIB Research added Solarvest's management aims to grow its order book beyond RM2 billion in the financial year ending March 2026 (FY26), supported by domestic clean energy initiatives such as LSS5, MyBeST, LSS6 and the CRESS programme. The group's tender pipeline remains robust at 5.86 gigawatt-peak (GWp), with battery energy storage systems (BESS) also emerging as a key growth area. HLIB Research maintains a "Buy" rating on Solarvest with an unchanged target price of RM2.25, based on a sum-of-parts valuation comprising a 25 times price-to-earnings multiple for its EPCC business and discounted cash flow for its recurring income assets. Key risks to the outlook include execution delays, political uncertainties and potential fluctuations in material and labour costs.
The Star
6 days ago
- The Star
Digital transformation funds must benefit media nationwide, says Sabah journalists' group
Sabah Journalists Association president, Mariah Doksil. KOTA KINABALU: The Sabah Journalists Association (SJA) has urged the government to ensure that its latest digital transformation initiative for the media is inclusive, practical and results-driven. This is especially important for journalists in Sabah and Sarawak who often face unique on-the-ground challenges, said SJA president Mariah Doksil. In welcoming the Federal Government's RM30mil allocation for digital transformation in the media sector, she added the move was a timely recognition of journalism's evolving role in an increasingly digital and artificial intelligence (AI)-driven landscape. However, Mariah stressed that meaningful engagement with state-level media organisations must not be treated as an afterthought 'Sabah and Sarawak's inclusion must not be tokenistic. There must be clear KPIs to assess whether or not these programmes truly reach and benefit journalists (across the nation),' she said in a statement on Sunday (June 15). ALSO READ: Govt to allocate RM30mil for media digital transformation, says Anwar Mariah added that the allocation is a valuable opportunity for media practitioners to upskill and embrace new storytelling tools, provided that training is accessible and tailored to the diverse needs of journalists. 'In a world increasingly shaped by AI, journalists must remain ethical, factually accurate, and, most importantly, human in their storytelling. These programmes should help ensure that our work retains its jiwa, the soul and empathy that define meaningful journalism,' she said. Mariah stressed the importance of proper consultation with local media bodies such as SJA to ensure that no one is left behind. The RM30mil allocation was announced by Prime Minister Datuk Seri Anwar Ibrahim when officiating the National Journalists' Day (HAWANA) 2025 celebration at the World Trade Centre in Kuala Lumpur on Saturday (June 14). The funds are intended to support digital transformation and the adoption of new technologies in the media industry. Mariah said that while the allocation is a step in the right direction, it must be translated into meaningful and measurable outcomes, not just for major media players in the peninsula, but for every journalist striving to tell stories from the rural and remote corners of Malaysia. ALSO READ: Fahmi announces founding board members of Malaysian Media Council Meanwhile, on the government's move to enhance social protection for local and national stringers – part-time or freelance journalists – through the Social Security Organisation (PERKESO) and Employees Provident Fund (EPF) i-Saraan contributions, Mariah welcomed it but called for clarity in its implementation. 'Local stringers are the backbone of rural coverage, while national stringers bridge regional voices with the national narrative. These are necessary steps to safeguard their livelihoods, but the process must be straightforward and accessible,' she said. Mariah also proposed the creation of a centralised database to keep track of stringers across the country, an initiative she believes will help provide structured and targeted support. 'Of our 115 active members, around 20% are stringers. A dedicated platform would go a long way towards ensuring that their contributions are properly recognised and their needs adequately addressed,' she added. On Saturday, Communications Minister Datuk Fahmi Fadzil announced that social security protection for stringers would be expanded under both PERKESO and EPF.
The Star
6 days ago
- The Star
All for media digitalisation
KUALA LUMPUR: As media organisations embark on digital transformation, the government is stepping in with support through a RM30mil fund to aid them in such efforts. Prime Minister Datuk Seri Anwar Ibrahim made the announcement yesterday in conjunction with National Journalists Day (Hawana) 2025. 'We want to ensure the journalism world is not left behind in adopting artificial intelligence while also maintaining a balance between AI and ethics,' he said during his speech at Hawana 2025 at the World Trade Centre Kuala Lumpur yesterday. 'The government has agreed to allocate RM30mil for journalists. This is the largest allocation the government has provided for journalists since Merdeka,' he said, adding that the fund would be used for training. He said the journalism fraternity must strike a balance between the development of technology and journalistic ethics. Press freedom must be defended as it is one of the pillars of democracy, he said. Citing American philosopher Noam Chomsky, he said there are some challenges in the form of manufacturing consent, whereby the tools of power are used to create a narrative. 'Journalists and media leaders have to ensure that while we reject manufacturing consent, we must also reject manufacturing dissent,' he said. He said that as much as one would not want the 'tyranny of the majority' where power is used to oppress, the tyranny of the minority which divides the country is also not wanted. Anwar also acknowledged some of the criticisms he has received, adding that some of his government's measures may not be seen as popular. This includes the push for higher wages in the government and corporate sector. However, he remains firm in his commitment to weed out corruption and steering reforms, although it may take some time. 'I will do my job regardless of whether I have the general support or not,' he said. Anwar emphasised that his intention is not to incarcerate people but to recoup money squandered through corruption and use it for the betterment of the people. He highlighted that in a tradition where corruption was endemic and systemic, his government has initiated reforms, including proper tender and award of projects and enacting new legislation such as the Public Finance and Fiscal Responsibility Act. 'It sounds simple, to most of you, but it is not easy. Many are not comfortable. Those who are used to the old ways,' he added. 'When we have taken action against those corrupt leaders, past or present leaders, businessmen, corporate leaders who have squandered billions of ringgit, I have not seen that sort of anger and support that we should have. But it does not matter,' he said. At a press conference later, Communications Minister Datuk Fahmi Fadzil said that the RM30mil fund is meant to help media organisations navigate the changing journalism landscape. He said the changes included the shift of the interests of news audiences and emergence of technologies. Also present were Star Media Group chief content officer Datin Paduka Esther Ng and chief news editor Mazwin Nik Anis.
