KUALA LUMPUR: Southern Cable Group Bhd’s strong performance this quarter is expected to sustain into the second half of 2025, boosted by capacity expansion and major project deliveries, Hong Leong Investment Bank Bhd (HLIB) said.
The research house said the ramp-up of Southern Cable’s additional 2,000 km per year production capacity and the commencement of 132 kilovolt (kV) cable deliveries for the East Coast Rail Link would support growth momentum.
“Earnings growth in financial year 2026 (FY26) will be driven by the launch of its 1,600 square millimetre 132kV cable and stronger sales in the United States market.
“Southern Cable is a top-three supplier to its key US customer, which is currently requesting up to 100 containers per month. This indicates meaningful headroom for growth once Lot 22 is commissioned in FY26,” it said.
HLIB noted that the group is also in the process of obtaining Underwriters Laboratories (UL) certification for three additional cable types, on top of its two existing UL-approved products. These new cables carry higher margins and are expected to further lift profitability.
The research house also expects demand from the solar sector to strengthen as Large Scale Solar 5 (LSS5) and LSS5+ projects move into the engineering, procurement, construction and commissioning phase in FY26.
HLIB maintained its “Buy” call on Southern Cable with a higher target price of RM2.17 from RM1.90, citing its strong market position in Malaysia’s power cable industry.
It added that the growing electricity demand, coupled with the exit of a major competitor, presents an opportunity for Southern Cable to capture additional market share.
“We believe Malaysia’s power infrastructure demand is set to trend higher, supported by three key factors: Tenaga Nasional Bhd’s ongoing grid resiliency efforts, the expansion of national power supply, and robust electricity consumption from energy-intensive industries such as data centres.
“Listed power infrastructure players with access to capital and economies of scale are best positioned to capitalise on this multi-year upcycle,” it said.
Following its review, HLIB raised Southern Cable’s earnings forecasts by between nine and 15 per cent after incorporating higher sales and margin assumptions.
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