to me, prospect is bright, they have secured order book of up to RM405million to be recognised in the books by 2022. in the next 2 years.

but one thing i dont like is that the margin is a bit too low to my liking, less than 5% PAT margin. if it's like 8-10% then ok lah. but the plus point on this is that their PAT margin has been on growing trend since 2016 albeit the lower recorded PAT margin.

minimum dividend policy = 15% of PAT per annum. which is not too bad.

Took a deeper dive into the prospectus, their main competitor will be Sarawak Cable which has poorer financials, which Southern cable win in every aspect apart for the slightly lower revenue. Apart from this Sarawak Cable, next would be Olympic Cable Company (subsidiary of OSK Holdings Berhad), Pan-international Wire & Cable (subsidiary of PIE Industrial Berhad), the rest are listed elsewhere. which totally no match in terms of fundamentals. Can take a closer look at page 221 of the prospectus.

COVID 19 situation is something beyond the company's control as described by them, but their order book can sustain them until 2022 already. so anything extra is a bonus.

to me, this could be a mid-term play like 3-5 years and the valuation is kinda reasonable at slightly less than 10x PE.

Dilution at NA per share is also very small at 5.88% only. unlike some of the IPO which they dilute the public shareholders a lot during IPO stage.

Thank you so much for the comprehensive reply, this is so much information!

As you described, the PAT margin does look a little bit too close for comfort.

Dumb question: How does the commodity price (steel/aluminium etc.) affect this company? I presume most of the materials used are somewhere along those line?

Thanks once again

very nice opinion.. will definitely try to apply for a punt.. thanks for the time/effort

Yes, the PAT margin is the only thing i don't like about the company, otherwise it looks like a well managed company to me.

Verbatim extraction of the concern on prices of raw material for you below:

Fluctuations in the prices of copper and aluminium may affect our profitability if we are unable to pass through the costs increment to the customers

Our main raw materials consist of copper cathodes, aluminium ingots, copper and aluminium rods, and copper wires used to make conductors for our cables and wires. For FYE 31 December 2016, FYE 31 December 2017, FYE 31 December 2018, FYE 31 December 2019 and FPE 30 June 2020, the total purchases of copper based materials include copper cathode, copper rods and wires, and annealed copper tapes accounted for 59.78%, 63.22%, 63.44%, 62.23% and 62.42% of our total purchases of materials and services respectively. Purchases of aluminium based materials including aluminium ingots and aluminium alloy rods constituted 12.45%, 7.93%, 11.25%, 16.62% and 18.42% of our total purchases of materials and services for FYE 31 December 2016, FYE 31 December 2017, FYE 31 December 2018, FYE 31 December 2019 and FPE 30 June 2020 respectively.

As copper and aluminium are globally traded commodity metals, we are subject to global price fluctuations and the risk of any unfavourable price changes will directly affect our margins and profitability if we are unable to pass through the costs increment to the customers.

The prices of copper and aluminium are influenced by global macroeconomic factors including, among others, supply and demand for the metals, energy costs to process these metals, transportation costs and currency exchange rates, all of these factors are beyond our control. Although we engaged an external party to provide commodity advisory services including trends and information on metal prices, there is no assurance that we would not be adversely affected by fluctuations in the prices of copper and aluminium.

We have contractual agreements with customers that allow us to adjust the selling price of power and communications cables and wires taking into consideration, among others, the fluctuations in the prices of copper and aluminium within specified time indicated in the agreements for the contractual period. For FYE 31 December 2018, FYE 31 December 2019 and FPE 30 June 2020, revenue from these types of customers accounted for 28.08%, 24.94% and 16.69% of our total revenue.


no problem, all i did was using about 40-60 mins of my time just now to screen through the prospectus only. I also learn at the same time i share these information with you guys.

It is very easy to read the prospectus if you know what you want to see and where you can find them in the prospectus, don't be scared by the 400-500 pages of the prospectus, you can zoom in very quickly.

Actually, reading and extracting information from the prospectus is very easy compared to preparing the prospectus, it takes monthsssss to do it, i know the pain because i been through that. hahahah

anyway, some additional information for you guys. something i really like about the company is how they manage their cash flow.

Please refer to page 282 of the prospectus for the historical cash flow table which they have very healthy and growing positive cash flow from operation.

they have also paid down a lot of borrowings in 2019.

their net cash position is at the all time high in 2019 (financial year ended 2019). This year surely not gonna be so high due to the MCO, but i think they are heading to the right direction.

you can read in detailed of their cash flow position from FYE2018 to FYE 2019 on page 287.

turn to page 294 for the key financial ratios.

their gearing ratio has been declining from 1.42 to 0.88 from 2016 to 2019 although it is slightly higher for the FPE2020 at 0.95.

the current ratio although is not as good as what I always wanted i.e. 2 times, but theirs improved from 1.33 to 1.71 from 2016 to 2019, the improvement proved to be well managed company.

This is coupled with their improvement in the inventory turnover period from 72 days to 38 days from 2016 to 2019. means your stock can only last 38 days in your warehouse and they will be sold off. the 73 days for FPE2020 is due to MCO, understandable.

overall, it looks like they are managing their company relatively well.

Thank you so much!

Seems like their exposure to raw material price fluctuation is still at est. 70% mark.

Not sure how much fluctuation this would translate to in scale, but is definitely an interesting piece of information for me to research on.

Once again, you sir, deserve a medal. Have a great day!

That a very good read and also nicely analytic

What i like about their company is their history of reduced cost of good sales which i think will have a direct impact to the EPS

Overall stilla good thing and try to ballot some shares first.

thank you and my pleasure.

do share more after you have taken a deeper look into it yea. have a good weekend~!

the cable business is not a growth industry
you may be looking at improving financial ratios but its only because they hardly have any capacity expansion plans

you may see they have major clients like TNB/TM using their cables, but alot of times major projects have smaller portions of assignments where the contractors are free to use whatever "affordable" cables available to them, so you may see big names but the contributions may be insignificant. nevertheless TNB remains key customer as seen from its prospectus but its a rather tough business to be in as there is hardly any moat in the cable business; southern cables are known to be in the "middle ground" between imported and lesser known cheap cables

Anyone use Rhbnow online banking to apply before?

So far ok?

This post has been edited by sl3ge: Oct 2 2020, 08:16 PM

It is a small company. Small portion of business from TNB is huge for it already. The fact that TNB contracted it shows they have confidence

I like this. But I will point out that sarawak cable is doing great in its cable business. Its losses come from helicopter and energy generation business. I feel Sarawak cable is quite fishy. Otherwise, the cable business is a steady and good business.

Normally how high the chance to get when we subscribe to IPO? The optimax IPO @0.3 and price already double now @0.77. Can Southern cable also follow the similar trend, we shall see on next friday

I would say 20 to 30 percent chance

anyone subscribing this?

Sarawak cable didnt really do so well though. but i too, think that cable business has it potential.

i don't think it could be that high, unless you're talking about trying to subscribe like 300k or 500 shares, then your chance is very high.

We can wait for the ballot table to be out then we can see our chances. typically around 10-15% chance probably.

I dont belive you. It can't be that low.

Example of solarvest ballot. Chances of a meaningful amount as he mentioned is very low.. unless you apply for a very low or a very high amount



This post has been edited by Krv23490: Oct 6 2020, 01:55 PM

My house fengsui up that by 20 percent.

send some my way pls, i applied samaiden.. this one still on the fence, or should i just whack only hahaha