KUALA LUMPUR (Oct 3): Hong Leong Investment Bank (HLIB) Research has valued Southern Cable Group Bhd (SCGB) at 47 sen, and said it expects SCGB to post stronger earnings for the second half ending Dec 31, 2023 (2HFY2023), based on: i) robust sales driven by encouraging purchasing orders secured and a strong order book; and ii) margin expansion resulting from a better product mix.
The research house, which does not have a rating for the stock, said that additionally, the recently announced National Energy Transition Roadmap is expected to benefit SCGB by gradually increasing the tender value of power cables from Tenaga Nasional Bhd.
“All in, we project SCGB’s FY2022-25 earnings to record a decent compound annual growth rate of 20.6%.
“We value SCGB at 47 sen, pegged at 16 times price-earnings to its mid-FY2024 earnings per share of 29 sen.
“Given its status as the largest power cable manufacturer in Malaysia, SCGB is strategically positioned to capitalise on the country's increasing power demand,” it said.