Southern Cable to raise RM71.2mil from ACE Market listing

  • Markets
  • Tuesday, 29 Sep 2020

KUALA LUMPUR: The Southern Cable Group Bhd aims to be listed on the ACE Market of Bursa Malaysia on Oct 16, 2020, with an issue price of 34 sen per share.

At the company’s prospectus launch today, the cable and wire manufacturer said it hopes to raise RM71.2 million from its initial public offering (IPO).

According to the prospectus, RM18.5 million of the proceeds would be used to purchase and upgrade its machinery and equipment, RM7.5 million to construct new factories and RM4.0 million to fund the purchase and installation of enterprise resources planning (ERP) information technology system.

"Additionally, RM27.5 million will be set aside as working capital, while RM9.2 million will be utilised for repayment of bank borrowings,” it said, adding that RM4.5 million would be used to defray estimated listing expenses and RM30 million for capital expenditure and expansion.

The company also planned to pay out minimum dividends of 15 per cent of its net profit, post-listing.

Meanwhile, at the press conference, group general manager Ooi In Keong said currently, the company is building two new cables and wires manufacturing factories in Kuala Ketil, Kedah.

"Together with the new machines and machines upgrade, these two factories will expand our total production capacity of cables and wires by 9,050 kilometres (km) to 40,130 km by the first half of 2022 (H1 2022), up from our annual production capacity of 31,080 km in 2019,” he said.

To support the higher production capacity, Ooi said the company is also setting up a new polyvinyl chloride (PVC) compound production plant next to its current factory in Sungai Petani, Kedah, which is also expected to be completed by H1 2022.

"Our manufacturing capacity of PVC compound material is targeted to increase by 4,200 tonnes to 12,000 tonnes per year,” he said.

He added that the factories would be used to manufacture new product range like automotive cables and wires, as well as high-voltage thermal resistant aluminium conductor cables.

Currently, Southern Cable manufactures cables and wires for use in numerous industry sectors such as power distribution, telecommunications, building and construction, infrastructure, manufacturing and processing industries, including oil and gas processing and petrochemical plants.

Its main customers include Tenaga Nasional Bhd, Telekom Malaysia Bhd and Petroliam Nasional Bhd (PETRONAS).

The company also delivers its products to the Mass Rapid Transit Sungai Buloh-Kajang project (MRT1) and the Refinery and Petrochemical Integrated Development ( RAPID) project in Pengerang, Johor.

Managing director Tung Eng Hai said the company will continue to aggressively participate in any tenders called by government-linked companies.

On the company’s order book, Ooi said as at Sept 1, 2020, Southern Cable’s order book stood at RM405 million, which can last until 2022.

To-date, the company commands about six per cent of the cables and wires market share in Malaysia.

According to Ooi, the Malaysian market will remain as their main focus, moving forward, as the local market represented 87.91 per cent, 98.06 per cent and 98.40 per cent of the company’s total revenue for financial periods ended June 30, 2020, Dec 31, 2019 (FY19) and FY 18, respectively. - Bernama
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