Southern Cable Group BHD IPO 71.2m, 34c: CABLE and wire manufacturer, 6% mkt share. to expand production capacity of cables and wires and plastic compound materials A)RM30 mil for capital expenditure and expansion. (Of this, RM18.5 mil is to purchase and upgrade machinery ,equipment, RM7.5 mil is to construct new factories , RM4.0 mil is to fund the purchase and installation of ERP). B) RM27.5 mil as working capital C) RM9.2 mil will be utilised for repayment of bank borrowings and RM4.5 mil would be to defray estimated listing expenses. 22.5% expansion in km of cables & wires: “The construction of the 2new factories near our current production plants in Kuala Ketil, Kedah, would increase our total built-up area from more than 416,000 square feet to more than 480,000 square feet, new machines and upgrade in current factory, this will expand our total production capacity by 9,050 kilometres of cables and wires to 40,130 kilometres of cables and wires per year by the first half of 2022,” Tung explained. PVC compound material to expand by 35%: “To support the higher production capacity, we are setting up a new polyvinyl chloride (PVC) compound production plant next to our current factory in Sungai Petani, Kedah, by first half of 2022. With this plant, our manufacturing capacity of PVC compound material is targeted to increase by 4,200 tonnes to 12,000 tonnes. Southern Cable’s IPO entails a public issue of 209.3 million new shares and offer for sale of 20.0 million existing shares at an issue price of RM0.34 per share. Out of 209.3 million new shares, 40.0 million shares will be for application by the Malaysian public, and 22.0 million shares for application by eligible directors, employees and persons who have contributed to the success of the Group. 67.3 million shares under the public issue are allocated for private placement to selected investors and the remaining 80.0 million shares to identified Bumiputera investors approved by the Ministry of International Trade and Industry. Meanwhile, 20.0 million existing shares would be offered for sale by way of private placement to selected investors. market size for the manufacture of electric and electronic cables and wires in Malaysia was valued at RM10.3 billion and Southern Cable commanded 6% for the manufacture of electric and electronic cables and wires in Malaysia. Southern Cable manufactures cables and wires that are used for power distribution and transmission, communications as well as control and instrumentation applications. The key supporting activities for the cable and wire manufacturing operations include furnace and casting operations and manufacturing of plastic compounds. The company services various industry sectors such as power distribution and transmission, telecommunications, building and construction, infrastructure, manufacturing and processing industries including oil and gas processing and petrochemical plants. The Group’s customers include Tenaga Nasional Berhad and Telekom Malaysia Berhad, and has supplied cables and wires for RAPID in Pengerang, Johor, and MRT Sungai Buloh – Kajang (MRT1) projects. – Sept 29, 2020
buy both MSC and Metrod. Metrod used to be the king of copper in Malaysia even though they are manufacturer but they still own a lot and has the capability to control their raw material cost while still making a profit. The rise in share price has a lot of reasons and is not a pump and dump
METROD - Notice of Book Closure METROD HOLDINGS BERHAD
Final Single Tier Dividend of 6 sen per share in respect of the financial year ended 31 December 2020
Kindly be advised of the following :
1) The above Company's securities will be traded and quoted "Ex - Dividend” as from: 26 Aug 2021 2) The last date of lodgment : 27 Aug 2021 3) Date Payable : 24 Sep 2021
The proposed Final Single Tier Dividend will be subject to the shareholders' approval at the forthcoming Annual General Meeting of the Company. Par value is no longer relevant due to the migration to the no par value regime under the Companies Act 2016
copper is their raw material. Metrod doesn’t own copper mines and they have to buy copper to manufacture copper wires. Cooper price has increased so their cost is higher now. We can not expect they earn like MSC (who operates a mine). We also can not expect they earn like steel counters. Why? If you take a look of the margin of Metrod and Tawin, you will see their margin is really low, as it is less than 1% for the last 5 years (the highest is 3.8% in the last 10 years). In fact, here is what the management told us in the last quarterly report:
"LME copper prices have increased sharply. Credit, commercial and security risks are expected to remain high due to volatile copper prices and currency and the uncertainties surrounding weak economic sentiment and forecasts. Margins remain under significant pressure. The Group is able to manage the copper and exchange exposure due to its hedging policies."
I just hope people understand what they pay for before they buy this counter. Some people may have bought this counter because of the wrong reason. They may have bought this counter as they notice the price of copper has increased and so they expect their earnings will be excellent. My expectation about their future earnings is pretty low as their cost is higher due to higher copper price and based on their history.
revenue steadily climbing for 2 consecutive qtrs. positive free cash flow for 2 consecutive qtrs around 70mm per qtr (after paying borrowing interest) net debt decrease from 1b in Q1 to 853mm in Q3. Metrod is a capital intensive business, their net debt is on par with working capital required, which points to management is pretty good in capital management.
if Metrod could keep churning out FCF of 200mm a year from now on, within 4 years they would be able to pay off their debt(althour unlikely as better to borrow and grow) and operates the largest mill of the region.
total shares issued is mere 120mm, FCF200mm means that's RM1.60 FCF per share, way more than their current share price...
If the FCF could sustain, METROD will worth ~RM10 based on 6X FCF.
Post a Comment
People who like this
You should check in on some of those fields below.
Click Confirm to delete this Forum Thread and all the associated comments.
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....