KUALA LUMPUR: Southern Cable Group Bhd made a firm debut on the ACE Market on Friday and climbed to a high of 38.5 sen, or 4.5 sen above its offer price of 34 sen in early trade.
At 9.10am, it was trading at 36.5 sen, up 2.5 sen. There were 161.62 million shares done at prices ranging from 33 sen to 38 sen.
The FBM KLCI was up 4.25 points or 0.28% to 1,518.20. Turnover was 443.73 million shares valued at RM237.24mil. There were 256 gainers, 127 losers and 285 counters unchanged.
Group managing director Tung Eng Hai said Southern Cable targets to enter the automotive and elevator segments by second half of 2021 by introducing a new product range, including power and control cables and wires for automotive and elevator applications.
For financial year ended Dec 31,2019 (FY2019), 76.1% of the group’s revenue was contributed by the power cables and wires, while 5.4% was from the communications cables and wires.
The sale of control and instrumentations cables and wires made up 9.4% of revenue and the remaining 9.1% was from the sale of related products and services.
The new range of cables and wires for the automotive and elevator segments are expected to be developed and commercialised in the second half of 2021.
“As a cables and wires provider with key supporting activities such as furnace and continuous casting as well as manufacturing of plastic compounding for our cables and wires manufacturing operations, we can quickly adapt to market changes and develop new products to extend our reach, ” he said in a statement.
Tung said the new factories would enable the company to expand annual production capacity of cables and wires.
The expansion was crucial as it target to increase its market share for the manufacture of electric and electronic cables and wires in Malaysia.
“These initiatives would allow us to address growing market opportunities in Malaysia as well as countries where we have already made inroads and underpin our hope to continue our growth story, ” he said.
From FY2016 to FY2019, the group recorded a three-year revenue compound annual growth rate (CAGR) of 11.7% from RM470.7mil to RM656.7mil. Its net profit reported a CAGR of 26.4% from RM14.2mil to RM28.5mil in the same period.
The book order will sustain the group’s earnings till the financial year ending Dec 31,2022.
Southern Cable will adopt a dividend policy to distribute at least 15% of its annual audited profit after tax attributable to shareholders as dividends, subject to business performance and recommendation of the board.
Its public issue involved 209.34 million new shares, enabling it to raise RM71.17mil.
Under the public issue, 40 million shares offered to the public were oversubscribed by 10.5 times. It also offered for sale 20 million existing shares.
Of the RM71.17mil raised from the IPO, Southern Cable would use RM30mil for capital expenditure and expansion, RM27.5mil for working capital, RM9.2mil to repay bank borrowings and RM4.5mil to defray listing expenses.
At an IPO price of 34 sen per share and based on the entire enlarged issued share capital comprising 800 million shares, its market capitalisation is RM272mil.
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