Greetings, fellow investors and market enthusiasts!
Today, we’re diving into the latest financial report from SOUTHERN CABLE GROUP BERHAD for their first quarter ended 31 March 2025. This Malaysian powerhouse in the cable and wire manufacturing sector has delivered a performance that certainly warrants a closer look, showcasing robust growth and strategic advancements. The report highlights impressive revenue and profit surges, underpinned by an expanding production capacity and significant contract wins, painting a generally positive picture for the company’s trajectory.
Let’s peel back the layers of this report and uncover the key takeaways that could shape Southern Cable’s future.
Financial Performance: A Quarter of Significant Growth
Southern Cable kicked off the financial year with an impressive showing, demonstrating strong growth across key financial metrics. The company’s strategic focus on expanding its production capacity and optimizing its product mix appears to be paying off, leading to a substantial increase in both revenue and profitability.
Quarter-on-Quarter Performance (Q1 2025 vs Q1 2024)
Q1 2025
Revenue: RM390.81 million
Profit Before Tax: RM35.86 million
Profit After Tax: RM27.40 million
Basic Earnings Per Share: 3.16 sen
Q1 2024
Revenue: RM312.03 million
Profit Before Tax: RM18.57 million
Profit After Tax: RM14.07 million
Basic Earnings Per Share: 1.76 sen
Comparing the first quarter of 2025 to the same period last year, Southern Cable’s revenue soared by 25.25%, reaching RM390.81 million. This significant jump was primarily driven by an enlarged production capacity, which increased by 19% to 49,980 km/year, along with higher sales volumes of power cables and wires and adjusted average selling prices in line with raw material costs. The growth wasn’t just on the top line; profit before tax surged by an impressive 93.07% to RM35.86 million. This robust profit growth was attributed to the higher revenue, a better product mix, and improved profit margins stemming from economies of scale achieved through increased production volume.
Sequential Quarter Performance (Q1 2025 vs Q4 2024)
Q1 2025
Revenue: RM390.81 million
Profit Before Tax: RM35.86 million
Q4 2024
Revenue: RM336.06 million
Profit Before Tax: RM30.47 million
The positive momentum continued from the immediate preceding quarter (Q4 2024) as well. Revenue for Q1 2025 increased by 16.29% from RM336.06 million, and profit before tax saw a 17.70% increase from RM30.47 million. This consistent upward trend highlights the company’s sustained operational efficiency and market demand.
Segmental Performance: Powering Ahead
The Power cables and wires segment continues to be the bedrock of Southern Cable’s revenue. For the current quarter, this segment contributed RM366.94 million, accounting for a dominant 93.89% of the Group’s total revenue. This represents a substantial increase of 32.02% compared to the same period last year.
While the power segment shone brightly, other segments faced headwinds. Revenue from communication cables and wires, control and instrumentation cables and wires, and others collectively decreased by 29.95% (RM10.21 million) due to lower sales in communication cables and wires and aluminium rods.
Geographical Contribution: Domestic Strength, Overseas Surge
Malaysia remains the largest contributor to group revenue, accounting for approximately 92.04% of total revenue. Sales from the Malaysian market grew by 16.86%. Interestingly, overseas market sales saw a remarkable surge of 636.26%, making up the remaining 7.96%. This significant overseas growth, though from a smaller base, indicates successful diversification efforts and potential for future international expansion.
Financial Health: A Snapshot
Beyond the income statement, the balance sheet and cash flow statement offer crucial insights into the company’s financial health.
| Financial Metric | As at 31 March 2025 (RM’000) | As at 31 December 2024 (RM’000) |
|---|---|---|
| Total Assets | 815,852 | 721,205 |
| Total Equity | 435,728 | 401,773 |
| Net Assets per Share (RM) | 0.47 | 0.45 |
| Cash and Short-Term Deposits | 97,746 | 82,704 |
| Total Borrowings | 230,982 | 215,707 |
Southern Cable’s total assets grew to RM815.85 million as of March 31, 2025, from RM721.21 million at the end of 2024. This increase is reflected in higher inventories, trade and other receivables, and cash and short-term deposits. The increase in inventories and receivables aligns with higher sales volume and increased production. Total equity also saw a healthy rise to RM435.73 million, pushing net assets per share to RM0.47 from RM0.45.
Cash Flow Dynamics
The cash flow statement reveals some interesting dynamics. Net cash generated from operating activities saw a decrease, moving from RM23.83 million in Q1 2024 to RM4.44 million in Q1 2025. This was mainly due to changes in working capital, particularly increases in inventories and trade receivables. However, net cash from financing activities turned positive, largely driven by drawdowns of bankers’ acceptance and proceeds from warrants conversion. This resulted in an overall net increase in cash and cash equivalents of RM15.04 million for the quarter, compared to a net decrease in the same period last year.
Risks and Prospects: Charting the Future
Southern Cable’s future prospects appear promising, underpinned by several strategic advantages and market tailwinds. However, like any business, it operates within a dynamic environment that presents both opportunities and challenges.
Bright Prospects Ahead
- Robust Demand: The company is well-positioned to capitalize on the rising demand for cables and wires in Malaysia, especially with the National Energy Transition Roadmap (NETR) objectives driving investments in power infrastructure, large-scale solar farms, and construction projects, including the burgeoning data center sector.
- Strategic Contracts: A significant boost came in February 2025 with contracts worth RM403.55 million from Tenaga Nasional Berhad (TNB) for underground cables and conductors, providing a strong revenue pipeline.
- Solid Order Book: As of March 31, 2025, Southern Cable boasts an impressive order book of RM1.32 billion, offering financial visibility stretching until 2026. This includes key contracts with power utility companies and Telekom Malaysia Berhad.
- US Market Expansion: The Group is optimistic about increasing sales to overseas markets, particularly the US, with new product certifications in progress to further expand its international footprint.
- Capacity Expansion: Plans are underway to construct a new production facility on a recently acquired 7.9-acre industrial land in Kuala Ketil, Kedah. This expansion, scheduled to commence in late 2025, is crucial for supporting growth initiatives, especially for the US market.
Navigating Potential Challenges
While the outlook is positive, potential investors should also consider factors such as:
- Raw Material Price Volatility: The cost of raw materials like copper and aluminium can fluctuate, impacting profit margins, although the company states it adjusts average selling prices in line with these changes.
- Market Competition: The cable and wire industry is competitive, requiring continuous innovation and cost management.
- Execution Risk of Expansion Plans: The successful completion and integration of new production facilities are crucial for realizing projected growth. Delays or cost overruns could impact financial performance.
- Reliance on Domestic Market: While overseas sales are growing, the significant reliance on the Malaysian market (over 92%) means the company’s performance remains highly susceptible to domestic economic conditions and government policies.
Overall, Southern Cable’s management is proactive, focusing on expanding its product range and production capacity to meet growing demands and sustain long-term growth, which is a positive sign.
Dividend Announcement: Returning Value to Shareholders
In a positive move for shareholders, the Board of Directors has proposed a final single tier dividend of 0.85 sen per ordinary share for the financial year ended 31 December 2024. This amounts to approximately RM7.65 million, subject to shareholders’ approval at the upcoming Annual General Meeting. This proposed dividend reflects the company’s commitment to returning value to its shareholders, a welcome sign of financial health and confidence.
Summary and
Southern Cable Group Berhad has delivered a compelling first-quarter report for 2025, showcasing significant revenue and profit growth driven by increased production capacity and strategic market positioning. The robust performance of its power cables segment, coupled with substantial new contract wins and a healthy order book extending to 2026, provides strong financial visibility and a positive outlook.
The company’s proactive approach to expanding its capacity and targeting overseas markets, particularly the US, demonstrates a clear strategy for sustained growth. While the decrease in cash from operating activities in this quarter is noted, the overall cash position improved due to financing activities, and the proposed dividend further underscores the company’s financial stability and shareholder-friendly stance.
Key points from the report that stand out:
- Exceptional growth in revenue and profit before tax, largely due to increased production capacity and improved margins.
- Dominance of the power cables and wires segment, acting as the primary growth driver.
- Significant contract wins and a strong order book providing long-term revenue visibility.
- Strategic plans for capacity expansion and international market penetration, particularly in the US.
- A proposed dividend, signaling confidence and a commitment to shareholder returns.
Looking ahead, Southern Cable appears well-equipped to leverage the ongoing demand for cables and wires in Malaysia’s energy transition and infrastructure development, alongside its growing international presence. The management’s focus on expanding its product range and production capabilities should serve the company well in navigating future market dynamics.
From a professional standpoint, Southern Cable’s Q1 2025 report demonstrates a company that is not only performing strongly in its core business but is also strategically investing in its future growth. The large order book provides a strong foundation, while the capacity expansion plans indicate a commitment to meeting future demand. The substantial increase in overseas sales, albeit from a lower base, is a positive indicator of diversification and market reach.
What are your thoughts on Southern Cable’s performance and future prospects? Do you believe their capacity expansion and focus on the US market will be key drivers for sustained growth? Share your insights in the comments below!
