Dividends 5 sen expired 29/6/16. No lose if hold for long term. Quite good for the dividends. More project in sarawak. The only thing lack is no big sharks play in this counter
Delayed projects implementation due to tenaga. Also hopefully stopped M & A. Dividend has increased. Last year paid 2 times dividend. Hope implementations will be quick. Power sold to Indonesia is money making.
SCable’s Sumatra plant to end stock’s downward spiral?
Toh estimates that Sarawak Cable needs up to RM80 million to develop each power plant. Photo by Shahrin Yahya
KUALA LUMPUR: The end of Sarawak’s pre-election rally and poor first-quarter results have sent Sarawak Cable Bhd’s (SCable) shares tumbling 28% from a five-year peak of RM1.82 on Jan 8.
The stock closed 3.68% lower at RM1.31 last Friday, with a market capitalisation of RM421.68 million.
However, a restructuring of its business and the commencement of the first of five mini-hydropower plants in Indonesia by the fourth quarter of this year (4Q16) might spell the end of the downward spiral in the cable manufacturer. The plant is expected to bring in up to RM30 million in annual recurring revenue.
“We expect to see immediate income contribution of about RM7 million from the mini-hydropower plant in 4Q16. The operational cost will be very small as we will be using water [to produce electricity],” its managing director and chief executive officer Aaron Toh Chee Ching told The Edge Financial Daily in an interview.
The plant is located in Sumatra, with a capacity of 10mw and estimated installed capacity of 14mw. SCable had signed an agreement with Perusahaan Listrik Negara Persero to sell the electricity produced to the Indonesian utility body for 20 years.
Still, the group’s current share price and earnings forecast have yet to reflect the lucrative long-term income stream of the power plant.
“[The] market is ascribing little valuation to the power plant. Based on our forecast, contribution from the plant could enhance our forecast for the financial year ending Dec 31, 2017 (FY17) and FY18 by 20% to 23%,” Hong Leong Investment Bank senior analyst Jeremy Goh said in an email.
Goh deems the power plant a lucrative business as the tariff and demand have been fixed by the Indonesian government under the power purchase agreement (PPA).
Based on the PPA, the initial tariff rate is 778 rupiah (23 sen) per kWh, with the subsequent increase to 968 rupiah per kWh. Earlier this year, the tariff was increased to 1,390 rupiah per kWh.
Goh expects SCable’s share price will react when the power plant starts to contribute to the group’s earnings.
According to Toh, commencement of its power plant was delayed from June to September this year due to additional rock blasting works at the plant.
Meanwhile, the group’s high gearing ratio of 183% is also a concern for investors. Its net debt stands at RM417 million.
Toh estimates that SCable needs up to RM80 million to develop each power plant.
Construction of two new power plants will begin next year, while the rest are waiting for approval from the Indonesian government.
To pare down debt and generate cash, Toh said the group is in talks with foreign strategic partners for a possible spin-off of its power assets in bourses like Singapore and Hong Kong next year.
“Singapore and Hong Kong are my ideal locations as there are more investors who are keen on investing in the renewable power industry,” he said. “However, it will be difficult for us to list by ourselves. Thus, we have to ride on other listed entities, which may see us injecting some of our power assets into the company and then go for an IPO (initial public offering) to raise funds,” he added.
On Jan 18, Toh was reported to have said that the group was in talks to rope in a Singapore-listed construction company for a potential stake sale of its mini-hydro plants in Indonesia.
He believes that the group’s power assets will fetch a better valuation once the power plant in Indonesia commences.
Toh also expects SCable to post improved net profit in FY16. Its net profit rose 64% to RM39.8 million in FY15 from RM24.23 million the previous year as revenue grew 329% to RM1.45 billion from RM339.44 million in FY14.
However, the group saw its net profit fall to RM3.57 million in the first quarter ended March 31, 2016 (1QFY16) from RM11.87 million a year ago, due to delay in projects for orders in hand to subsequent quarters in this financial year. This was despite a 6% increase in revenue to RM364.46 million from RM343.61 million in 1QFY15.
Toh said based on its latest two months’ performance guide, the group has started cost-saving initiatives of its manufacturing activities, which have shown some results.
“We are targeting to save at least 1% to 2% [or about RM
Company has stopped doing acquisitions ... It's already income generating. However tenants slow to start project. Better dividend. Hope give special dividend again this 2016.
Last call. Time to collect before too late,before the project release. One it release, it shall fly like rocket,why? No competitors for cable work in sarawak. Scable is dominating.
1NDP my hero too. Because of it, I can collect many stocks at lower price than their performance. I earn at least 20% for each of the stock I buy. Now, only leave scable n hsl on hand. I try to collect more at lower prices.
This time is different, when the truth came to light eventually, Malaysia economy may collapse. If u r still holding any shares, u may get stuck for a long time.
-SCB has an order book of RM1.42bil, comprising RM900mil worth of construction projects (mostly power transmission lines) and RM520mil in manufactured products.
This year’s target sales for the group’s manufacturing segment is RM1bil.
-Besides power and telecommunication cables, SCB also makes and supplies galvanised products and steel structures.
On the Pan Borneo Highway project, SCB was targetting to supply guard rails and lamp posts, which had been used in road construction projects in the state, for the Sarawak’s largest single infrastructure project.
SCB have registered as a supplier with Lebuhraya Borneo Utara Sdn Bhd (LBU).
-After a slower first quarter, SCB was expecting power cable sales to pick up in the second quarter to over RM300mil compared with RM200mil in the January to March quarter as well as improving profit margins brought about by the new orders.
-On SCB’s joint venture hydro power plant project in north Sumatra, Indonesia, the project was expected to be completed by September. The 10MW plant estimated to cost RM80mil is scheduled for commissioning in the fourth quarter.
sheep , why this stockkeep falling ? got any bad news can advise ah example is this comapny want right issue can update me , I long time not follow this scable please
-Today, HLIB research retains a BUY rating (pending the release of 2Q16 results on 26 Aug) with a SOP TP of RM1.92, in anticipation of a pickup in earnings over the coming quarters.
-The research house opines that current share price 30.5% correction from 52-week high of RM1.87 offers opportunity for LT investors to accumulate SCABLE, given its undemanding valuation of 9x FY17 P/E (against HLIB’s average 12x construction’s P/E) and 1.25x P/B (10-year average 1.7x), supported by a steady 2015-18 earnings CAGR of 11% and decent FY17 yield of 3.3%.
Look at the fundermentals and the long term and remember Sarawak Cable is the only HT cable producer and installer in the country which gives them a huge advantage when tendering jobs as they have no competition also in regards to the Pan Borneo Higeway when that gets underway just think of all the new electrical sub station it will require and where do you think those will come from oh yes now you see the potential right ?
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
duenchan
143 posts
Posted by duenchan > 2016-06-09 17:29 | Report Abuse
back to square 1.