Sarawak Cable order book quadruples to RM800mil

KUCHING: Sarawak Cable Bhd’s order book for cable and wire has surged to nearly RM800mil in July 2022 from RM200mil last December as demand picks up with the recovery of the economic activities.

The company said it has been able to build up the order book with an increase in call-ups and deliveries.

“After weathering the Covid-19 pandemic impact, we are seeing strong recovery in the cable and wire sector when most of the economic activities resumed in early 2022. We are confident that this segment will be back to normalcy and contribute positively towards the group’s profitability,” Sarawak Cable added in management discussion and analysis in its 2022 annual report.

In the 17-month period to May 31, 2022, the cable and wire segment contributed 88.8% of Sarawak Cable’s group revenue of RM815.9mil, with the segment incurring a loss of RM37mil.

Sarawak Cable said to remain as the dominant player in the industry, its cable and wire subsidiaries continue to lead in product innovation and development to provide cost-effective solutions to customers and support the nation’s development.

To this end, its cable and wire subsidiaries have adopted multiple green initiatives in line with the group’s emphasis on environmental preservation.

For instance, it said wholly-owned subsidiary Leader Cable Industry Bhd had entered into an agreement to install a solar PV system to harvest solar energy at Plot 11 Tikam Batu factory (in Kedah) with service provider Leader Solar Sdn Bhd.

“The project kicked off in the third quarter of 2021 with the installation of 2,462 units of PV panels for a solar capacity of 1,329.48 kilowatts peak. The system was energised on May 13, 2022,” it added.

During the financial period under review, the company said metal prices on the London Metal Exchange were volatile, with both copper and aluminium prices hitting record highs in early 2022.

It said the high metal prices had strained the cash flow of the group’s cable and wire subsidiaries as they needed more working capital to acquire the same volume of metal for their manufacturing activities.

“The metal price volatility does not affect the profitability of cable and wire as we adopt back-to-back booking together with a future hedging strategy for our metal requirements without taking any short or long positions.

“Our major customers like Tenaga Nasional Bhd and Telekom Malaysia Bhd are aware of the fluctuation in metal prices and hence their contracts are on a metal variation basis,” said Sarawak Cable.

On the group’s transmission line construction business under wholly-owned subsidiary Trenergy Infrastructure Sdn Bhd, the group said that Trenergy had secured a few transmission line maintenance jobs during the financial period, while standing in a good position to secure several more power grid maintenance tenders.

Trenergy is currently executing two large scale transmission line projects, namely the Kota Marudu to Pitas Sabah reconductoring project and the Point Z and Point M projects near Jandar Baik in Pahang.

Sarawak Cable reported that after selling its H225 helicopter four months ago, APL is now left with five helicopters and a simulator that are leased to the Defense Ministry via Gading Kasturi Sdn Bhd (Gadang).

“We are now in an advanced stage of negotiating with Gading to sell the five helicopters and the simulator.

“This proposed sale will reduce our bank borrowings even further, allowing us to conduct a thorough review of whether we should realign this (aviation) segment’s direction into “aviation for power grid construction” or gradually wind it down.

Meanwhile, the group expects its proposed sale of the hydro power plant in Medan, Indonesia to KAB Energy Holdings Sdn Bhd to be completed by November.

Sarawak Cable, which is saddled with borrowings totaling RM445.5mil as at May 31, 2022, was classified as a Practice Note 17 issuer on Sept 30, 2022.