Southern Cable lifts itself into new sectors

Firm debut: Southern Cable Group MD Tung Eng Hai (left) with independent non-executive chairman Rizvi Abdul Halim at its virtual listing on the Ace Market yesterday.

PETALING JAYA: Southern Cable Group Bhd (SCG) will make its foray into new business segments in the automotive and elevator fields by the second half of 2021.

The company, which made its debut on the Ace Market yesterday, will do so through the introduction of a new product range, including power and control cables and wires for application in the automotive and elevator industry.

“The expansion into the automotive and elevator segments is because we would like to expand our product range and we also see the demand from these industries to be high in the near future, ” group general manager Ooi In Keong said at a virtual press conference after its initial public offering (IPO) yesterday.

The new range of cables and wires for the automotive and elevator segments are expected to be commercialised in the second half of 2021.

SCG made its debut at 33.5 sen, compared to its reference price of 34 sen, and reached a high of 38.5 sen within the first 15 minutes of trading.

Due to the overall weaker market sentiment, SCG closed at 33 sen, or one sen below its offer price of 34 sen.

It was actively traded with 304.94 million shares being done at prices ranging from 33 sen to 38.5 sen.

The company said in a statement that it was allocating RM30mil for capital expenditure and expansion from the proceeds raised.

Of this amount, RM18.5mil will be used to purchase and upgrade machinery and equipment, RM7.5mil to construct new factories and RM4.0mil to fund the purchase and installation of an enterprise resource planning information technology system.

It further added that RM27.5mil will be set aside as working capital while RM9.2mil will be utilised for repayment of bank borrowings and RM4.5mil would be to defray estimated listing expenses.

With the expansion into the new business segments, the company is expecting the automotive and elevator industries to contribute to its revenue from the second half of 2021.

“We are still approaching potential clients and are targeting local clients in the automotive industry, ” Ooi said.

SCG is today mainly involved in the business of manufacturing cables and wires that are used for power distribution, communications as well as control and instrumentation applications.

Ooi said the company’s order book as at Sept 1 stood at RM405.4mil, which could last until its financial year 2022 ending Dec 31 (FY22).

“The company continues to tender for new projects to strengthen this order book. We aim to sustain our profit and revenue growth trends moving forward, ” he said.

From FY16 to FY19, SCG said it recorded a three-year revenue compounded annual growth rate (CAGR) of 11.7% from RM470.7mil to RM656.7mil, while net profit reported a CAGR of 26.4% from RM14.2mil to RM28.5mil in the same period.

SCG also said it will adopt a dividend policy to distribute at least 15% of its net profit as dividends.

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