Bursa Hot Stocks: Southern Cable’s Earnings Forecast Raised Up to 20% by HLIB Amid Capacity Expansion and Surging Demand
M+ Global Updates 03/01/2025 14:02
SCGBHD
0225.MY
1.27
+2.42%


Source: The Edge Malaysia

Hong Leong Investment Bank (HLIB) raised Southern Cable Group Bhd's $SCGBHD 0225.MY$ earnings forecast after the group's third quarterly results came within expectations, alongside growing demand and capacity expansion.

In a note on Friday, HLIB raised Southern Cable's FY2024/2025/2026 earnings forecasts by 13%/20%/19%, respectively.

The research house revised its estimates after Southern Cable’s nine month earnings of RM47 million, which grew 176% year-on-year (y-o-y), exceeded expectations.

HLIB also highlighted a surge in the manufacturer’s utility sales, with a 70% increase quarter-on-quarter (q-o-q) and 82.8% y-o-y, driven by strong demand in the power infrastructure sector.

This growth was mainly supported by the commissioning of Lot 38 and robust sales growth in both domestic and US markets.

“With Lot 38 running at full capacity since 3Q24, the group is now expanding its annual production capacity by an additional 5,000km at its existing plant,” the house noted.

HLIB noted that monthly cable shipments to a key customer in the US rose from 40 to 45-50 containers.

With that, the company is expanding its capacity by 20-30% over the next two years to meet growing demand, supported by a RM22 million investment in new facilities.

Additionally, a major long-term contract with Tenaga Nasional Bhd $TENAGA 5347.MY$ is expected to be secured soon, further strengthening its market position.

“... alongside SCGBHD’s expanded capacity and the exit of a major cable supplier in Malaysia, we believe the group is well-positioned to secure a larger contract win under the LT-contract,” said HLIB.

Southern Cable’s profit margins are also expected to improve with the launch of a plastic compound plant, ensuring better cost control and supply consistency.

Therefore, HLIB increased its target price to RM1.45 from RM1.15.

Despite its strong prospects, Southern Cable remains a non-rated stock by HLIB.

notion leader rite?

to the moon🔊🔊🔊

ghl going to privatize. why people not selling it?