KUALA LUMPUR (Aug 26): Cable and wire manufacturer Southern Cable Group Bhd (KL:SCGBHD) saw its net profit more than double year-on-year in the second quarter ended June 30, 2024 (2QFY2024), on the back of higher revenue, better product mix and lower plastic compound costs.

Net profit for 2QFY2024 jumped to RM14.43 million from RM5.35 million in 2QFY2023, Southern Cable's bourse filing on Monday showed.

Quarterly revenue rose 36% to RM315.33 million from RM231.85 million, mainly attributed to higher sales volume of power cables and wires, and higher adjusted average selling prices of cables and wires in line with higher raw material prices.

The increase in revenue was further supported by the group's larger production capacity following the commencement of a new production facility at its headquarters in Kuala Ketil, Kedah. The new facility that produces low-voltage power cables and wires has an annual capacity of 5,000km, which should raise the group’s annual capacity to 46,98 km by end-2024, from 41,980km.

The power cables and wires segment accounted for RM285.46 million or 90.53% of the group’s total revenue for the current quarter, up 39.15% from RM205.15 million in 2QFY2023. The remaining RM29.87 million or 9.47% of total group revenue was derived from the communication cables and wires segment, control and instrumentation cables and wires segment, and others.

No dividend was declared for the quarter.

Rising US orders raises anticipation for higher overseas revenue

For the first half of the year (1HFY2024), Southern Cable's net profit almost-tripled to RM28.50 million from RM10.49 million in the previous year's corresponding period, as revenue jumped 32.7% to RM627.36 million from RM472.78 million previously.

Looking ahead, Southern Cable managing director Tung Eng Hai said the group is investing in its production capacity to meet the growing demand for cables and wires.

"We continue to receive numerous enquiries from various industry players, including power transmission and distribution, construction, and infrastructure, as well as data centre builders.

"With the increasing demand for power to support new developments, Southern Cable is poised to see [a] new leap in revenue base,” he said in a separate statement.

The group’s current orders in hand stood at RM923.1 million, which includes the recently secured RM99.6 million supply contract from Tenaga Nasional Bhd (KL:TENAGA). These orders, expected to be fulfilled by 2026, involve supplying underground cables and conductors to power utility companies, rectifier and battery systems to a major telecommunications company, and purchasing orders from engineering, procurement, construction and commissioning (EPCC) contractors.

The group, which has observed an increase in orders from the US, in line with rising construction activity there, is anticipating a gradual improvement in overseas revenue, which stood at 4.13% of its total revenue in 2QFY2024.

"We are also looking into expanding our product line to cater to the US market, aiming for long-term sustainable revenue growth that aligns with the country’s development and supports our growth," said Tung.

At market close on Monday, Southern Cable’s shares were up one sen or 1.18% at 83.5 sen, giving the group a market capitalisation of RM718.14 million. The counter has risen over 94% since the beginning of the year.