Southern Cable targets to raise RM71.2 mil from IPO

CABLE and wire manufacturer, Southern Cable Group Berhad targets to raise RM71.2 mil from its initial public offering (IPO) listing on the ACE Market of Bursa Malaysia Securities Berhad.

At the IPO prospectus launch today, Southern Cable managing director, Tung Eng Hai said that the Group’s listing on the ACE Market of Bursa Malaysia Securities Berhad was aimed to elevate Southern Cable’s profile and raise funds to expand production capacity of cables and wires and plastic compound materials to cater for future growth.

From the total proceeds raised, the Group has allocated RM30 mil for capital expenditure and expansion.

Of this, RM18.5 mil is to purchase and upgrade machinery and equipment, RM7.5 mil is to construct new factories and RM4.0 mil is to fund the purchase and installation of enterprise resource planning (ERP) information technology system.

The Group will set aside RM27.5 mil as working capital while RM9.2 mil will be utilised for repayment of bank borrowings and RM4.5 mil would be to defray estimated listing expenses.

“The construction of the two new factories near our current production plants in Kuala Ketil, Kedah, would increase our total built-up area from more than 416,000 square feet to more than 480,000 square feet.

“With the new machines and upgrade in current factory, this will expand our total production capacity by 9,050 kilometres of cables and wires to 40,130 kilometres of cables and wires per year by the first half of 2022,” Tung explained.

“To support the higher production capacity, we are setting up a new polyvinyl chloride (PVC) compound production plant next to our current factory in Sungai Petani, Kedah, by first half of 2022. With this plant, our manufacturing capacity of PVC compound material is targeted to increase by 4,200 tonnes to 12,000 tonnes per year.

“All in all, these initiatives should strengthen our position in the cables and wires sector, and to play our role in enhancing the growth of this nation,” he added.

Southern Cable’s IPO entails a public issue of 209.3 million new shares and offer for sale of 20.0 million existing shares at an issue price of RM0.34 per share.

Out of 209.3 million new shares, 40.0 million shares will be for application by the Malaysian public, and 22.0 million shares for application by eligible directors, employees and persons who have contributed to the success of the Group. 67.3 million shares under the public issue are allocated for private placement to selected investors and the remaining 80.0 million shares to identified Bumiputera investors approved by the Ministry of International Trade and Industry.

Meanwhile, 20.0 million existing shares would be offered for sale by way of private placement to selected investors.

According to the Industry Overview report prepared by Vital Factor Consulting Sdn Bhd, the market size for the manufacture of electric and electronic cables and wires in Malaysia was valued at RM10.3 billion and Southern Cable commanded an estimated market share of 6% for the manufacture of electric and electronic cables and wires in Malaysia.

Southern Cable manufactures cables and wires that are used for power distribution and transmission, communications as well as control and instrumentation applications.

The key supporting activities for the cable and wire manufacturing operations include furnace and casting operations and manufacturing of plastic compounds.

The company services various industry sectors such as power distribution and transmission, telecommunications, building and construction, infrastructure, manufacturing and processing industries including oil and gas processing and petrochemical plants.

The Group’s customers include Tenaga Nasional Berhad and Telekom Malaysia Berhad, and has supplied cables and wires for RAPID in Pengerang, Johor, and MRT Sungai Buloh – Kajang (MRT1) projects. – Sept 29, 2020

 

 

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