The Daily Pulse of Bursa Malaysia

Increased spending on power infra augurs well for Southern Cable

zaclim
Publish date: Wed, 08 May 2024, 09:12 AM
zaclim
0 111
Daily Pulse is a blog that provides daily stock updates and insights on the Bursa Malaysia.

Follow us in telegram for more daily discussion
https://t.me/xifuinvcommunity

Southern Cable Group Bhd (SCG) has been on an uptrend since early this year

The counter has surged 37.2% to close at 59 sen on May 7, touching a year high of 60 sen.

It was trading at a year low of 28 sen last year.

It looks like SCG may continue its uptrend to breach 65 sen resistance level and thereafter 72 sen.

The manufacturer of cables and wires is poised to benefit from rising power infrastructure spending to cater for an expected rise in electricity consumption.

It is already serving customers such as Tenaga Nasional, Sabah Electricity and Sarawak Energy.

SCG’s orderbook has exceed RM1 billion (1.14x cover ratio), providing earnings visibility for the next three years.

Its recently secured MYR332.1m contract from TNB for the supply of underground cables and conductors brings its YTD contract wins to more than RM500 million.

More excitingly, SCG is a thriving player in this evergreen market, which will have a greater need to fulfil Malaysia's ambitious goal of achieving net zero emissions by 2050.

This includes higher uptake of renewable energy (RE) sources and the enhancing of the country’s grid, is expected to be a catalyst for SCG’s earnings growth.

SCG is expected to enjoy growing export sales and recovering margins, recording a FY22-25 earnings CAGR of 24.3% backed by a solid orderbook.

Under the National Energy Transition Roadmap solar photovoltaic (PV) capacity is expected to chart a 14% CAGR to 57GW by 2050.

This would augur well for SCG’s certified solar PV cables, which are now widely used by major solar EPCC players.

Meanwhile, Tenaga Nasional is upgrading the country’s power grid to accommodate the increasing integration of RE and growing energy consumption.

Some RM420 billion is the estimated investment needed to upgrade the grid over 2023 to 2050 whle Tenaga has expected RM90 billion in capex for 2025 - 2030.

As it is, these contracts account for more than 30% of SCG's revenue, so the group stands to gain significantly from these upgrades.

SCG also has strong and longstanding partnership with TNB and its reputation for delivering high-quality products.

This smallish company can easily be missed by investors but it is one of the sector’s cost leaders and possesses the widest range of product offerings locally.

It also enjoys the lion’s share of demand for cables from Tenaga and serves as an interesting investment case for investors.

More articles on The Daily Pulse of Bursa Malaysia
Censof hits 30-month high on heightened investors’ interest. Can it sustain?

Created by zaclim | Jun 13, 2024

Censof Holdings Bhd is on a good run, gaining close to 20% in just over two days. Has investors missed the boat or can they still make some trading profits from this counter?

Edelteq offers interesting upside to investors

Created by zaclim | Jun 12, 2024

Edelteq Holdings Bhd has seen a surge in its share price to reach a 10-month high recently. Can the upswing continue

Pantech to see continued upward momentum despite poorer results

Created by zaclim | Jun 11, 2024

Pantech has made good ground in terms of share price, rising close to 50% in the past year. While it posted disappointing results recently, it will likely ride on the expected elevated crude oil price

Evergreen poised to turn the corner, boosted by pick up in demand from the US and EU

Created by zaclim | Jun 10, 2024

Evergreen Fibreboard Bhd has shown signs of a bullish momentum and could see it move closer to its year high of 38 sen. Question is when it can move beyond that level.

Inta Bina rallies to record high share price. Can it go further?

Created by zaclim | Jun 10, 2024

Inta Bina has seen surge in share price recently after bagging RM112 million job. The size of the job may not be so huge but collectively with 5 new jobs this year alone, the future looks promising

Is Datasonic ready to propel higher?

Created by zaclim | Jun 10, 2024

Datasonic Group Bhd touched a new 3-year high on June 7. Indications are that the counter is likely to continue to surge upwards given its improving financials. Time to get your hands in this counter?

ITMAX saw new highs but signs point to more bullish movements

Created by zaclim | Jun 06, 2024

ITMAX System Bhd shareholders gota treat after the counter touched its new high of RM2.47. Is it still time to enter?

Prostasco on the rise with better prospects

Created by zaclim | Jun 04, 2024

Protasco Bhd has appreciated more than 50% in over a year despite its loss making position. Hopes are high that it will continue to be profitable after returning to the black in FY23.

Press Metal saw heightened buying interest after posting good FY24 results

Created by zaclim | Jun 04, 2024

Press Metal Aluminium Holdings Bhd is back on investor’s radar, hitting a high of RM6.50 recently.

Tek Seng on higher ground, growth in sight

Created by zaclim | May 31, 2024

Tek Seng Holdings Bhd has been gaining traction although it has not moved much in the past year. What is driving the positive momentum?

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment