Southern Cable Group Bhd (SCable) says it is seeing more enquiries for orders and hopes to ride on this to capture a larger market share.

       The group, which is a manufacturer of cables and wires, says new sales will be driven by new products targeting existing and new industries.

       “We are increasing our production to pre-pandemic levels to fulfil the pent-up demand from industries such as utilities, renewable energy, manufacturing, construction and infrastructure,” managing director Tung Eng Hai says.

       These industries were previously held back by the country’s lockdown measures.

       SCable has had a tough third quarter.

       The double whammy of lowered sales due to the lockdowns and higher raw material costs of plastic and metal-based materials had seen SCable’s net profit for its third quarter ended Sept 30, 2021 fall by some 81% year-on-year (y-o-y) to RM1.38mil.

       Revenue declined by some 16% to RM127.2mil in the same period.

       The group says it has the option to adjust its selling prices to its clients to factor in the rise in raw material prices.

       “Our existing contracts with our major customers allow us to adjust for raw material price fluctuations on a quarterly basis, while we also have back-to-back hedging of our raw material purchases for daily sales,” Tung says.

       “Furthermore, our comprehensive in-house supporting activities such as furnace and continuous casting allows us to manage our costs effectively, and helps us remain competitive,” he adds.

       The group is anticipating profit margins to improve with the development of new products.

       Growth is also expected from industries that are growing.

       “We are excited about growth opportunities in the construction, infrastructure and solar sectors, resulting from our new product development initiatives,” Tung says.

       For the construction and infrastructure industries, the group recently developed a new aluminium-based industrial cable as a substitute to the conventional copper cable.

       This will enable its clients to mitigate high copper prices, Tung says.

       “We are able to offer our customers a more cost-viable alternative, while maintaining performance and quality requirements,” he says.

       SCable has secured the TüV SüD certification for its solar photovoltaic (PV) cable, and this product can now serve as an import substitute for the local solar sector’s consumption.

       “We already have a track record in supplying the alternating current portion of low and medium voltage power cables to solar PV projects.

       “With the newly certified cable, we can now also supply the direct current portion,” Tung says.

       Tung says that approximately 30% to 40% of its revenue comes from direct sales to engineering, procurement, construction, commissioning and other contractors.

       Utility companies from the power and telecommunication sectors contribute about 20% to 30% of revenue; and resellers including distributors, wholesalers and trading companies made up some 25% to 35% of its revenue.

       Its order book stands at approximately RM550mil and will be delivered over the next two years.

       This comprises a RM324mil order book and RM225.7mil in unbilled purchase orders from its customers.

       The group says this also includes recently won contracts which were announced recently, including the RM30.4mil contract to supply rectifier systems to Telekom Malaysia Bhd in Sept 2021, and the RM18.5mil contract to supply underground cables and conductors to Tenaga Nasional Bhd in October 2021.

       “We have been seeing more inquiries recently which would potentially strengthen our orders in hand,” Tung says.

       He also says that the industry for the manufacturing of electric and electronic cables and wires in the country is very fragmented and the group holds an estimated market share of approximately 6% according to its internal assessments.

       “The sector is very fragmented and is not being controlled by a few major players.

       “This demonstrates the vast potential for us to keep growing,” Tung says.

       Its capital expenditure plans for FY22 are still on track where it will spend around RM11mil for the construction of new production facilities, purchase and upgrade of machinery and equipment, and for an Enterprise Resource Planning system.

       The RM11mil was sourced from the funds that it had raised from its initial public offering that was done in October 2020.

       The group is also hoping to enter the local and Vietnam automotive wire harnessing market, noting that its automotive wires are undergoing evaluation with potential clients.

       SCable is also working to secure more certifications from international quality and safety organisations for its cables and wires in an effort to increase recognition of its products and export sales moving forward.