AmResearch revises up Sarawak Cable earnings outlook


  • Business
  • Saturday, 01 Jun 2013

PETALING JAYA: AmResearch is revising its earnings outlook for Sarawak Cable Bhd on expectations that the company would secure a number of transmission jobs in Sarawak.

“We have tweaked our financial year 2013 to 2015 (ending Dec 31) earnings higher, as we expect Sarawak Cable to secure a number of transmission jobs in Sarawak, including the lucrative 500 kilovolt (kV) backbone power line in Sarawak (transmission package worth RM1bil) from Sarawak Energy Bhd (SEB).

“With the 13th general election behind us, we expect the long-delayed project, and others, to be awarded soon,” said AmResearch in its report yesterday.

The research house said it recently hosted a meeting with Sarawak Cable, which was also attended by institutional funds.

“We came away with a more upbeat view on Sarawak Cable, premised on it securing the 500kV backbone package, which is expected to be awarded by year-end; and the acceleration of the state government’s rural electrification scheme (RES) to meet the state’s original target of 95% by year-end (currently at 60%).”

AmResearch noted that after a long delay, the 500kV package is expected to be awarded this year, as there was “urgency to meet the needs of power-intensive industries, notably, in the Sarawak Corridor of Renewable Energy”.

“We understand that the award of the job is only awaiting state approval.

“We do not foresee any problems, as Sarawak Cable is the biggest transmission engineering, procurement and construction outfit in the state and SEB is a major shareholder of Sarawak Cable,” it said.

AmResearch also said that apart from the 500kV job, the company is expected to benefit from the RES, as only 60% is completed, and RM400mil worth of jobs is expected to be tendered out this year.

“Note that Sarawak Cable is the dominant supplier of fabricated steel poles and cables via units Sarwaja and Universal Cable, respectively. We assume that Sarawak Cable would get 80% of the RES jobs to be tendered out this year.

“In anticipation, management indicates it has ramped up production with 100,000 pieces of poles currently in stock. In addition,

“Sarawak Cable is also eyeing a number of smaller transmission jobs with a potential total value of RM400mil. This includes the Tanjung Manis-Bintulu and Mambong-Kalimantan lines.”

According to AmResearch, Sarawak Cable currently has an order book of RM687mil, with an outstanding amount of RM202mil.

“We have a conservative order book assumption of RM1bil for FY13 (including the 500kV line) to be progressively recognised between FY13 and FY15.”

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