Southern Cable on strong footing for 4Q

PETALING JAYA: Southern Cable Group Bhd (SCG) is heading into the final quarter of this year (4Q25) with expectations of firmer earnings momentum, underpinned by sustained power grid-upgrades, rising export orders and an expanding product mix that is driving margin improvement.

Analysts expect the cable manufacturer to deliver an even stronger 4Q25 performance as major domestic infrastructure programmes and the upcoming roll-out of large-scale solar projects accelerate demand.

Apex Research said the group’s earnings would be supported going into next year and it remains well positioned for sector tailwinds from rising grid investment, solar development and data centre expansion.

“We expect SCG to deliver stronger earnings in 4Q25, supported by sustained demand from domestic infrastructure work and overseas markets,” the research house said in a note to clients yesterday.

Hong Leong Investment Bank Research (HLIB Research) echoed the upbeat outlook and said it expects the next quarter to reflect a “more favourable product mix”, partly due to the maiden contributions from the Eastern Corridor Rail Line (ECRL) project and stronger US orders.

It added that the rollout of Large Scale Solar 5 (LSS5) projects and LSS5+ engineering, procurement, construction and commissioning (EPCC) packages, expected between 4Q25 and 3Q26, should “drive stronger cable demand heading into next year”, creating an addressable market comparable to Tenaga Nasional Bhd’s latest RM1.9bil contract.

The optimism comes on the back of a robust quarter, with SCG posting a 3Q25 core net profit of RM35.6mil, up 13.1% quarter-on-quarter and 73.3% year-on-year (y-o-y), bringing earnings for the first nine months of this year (9M25) to RM96.2mil, nearly double a year earlier.

HLIB Research noted that SCG’s 9M25 core profit growth of 101% y-o-y exceeded its expectations at 79% of full-year forecasts, while Apex Research described the quarter as “within expectations” but underscored that earnings momentum remains strong.

SCG’s 3Q25 revenue rose 16.4% y-o-y to RM446.5mil, driven primarily by the power cable segment, where gross profit surged 71% amid a more favourable mix of medium-voltage and high-voltage cables.

Apex Research highlighted that product margins benefited from stronger US sales, where exports jumped 103.6%.

“Export sales also rose sharply 40.1%, led by stronger demand from the United States, which likely supported the margin uplift,” it said.

Domestic demand remained solid, with local sales rising 8.3%, supported by steady infrastructure-related demand. The group’s production capacity rose to 54,980km annually with utilisation still high at around 85%.

Both research houses expect SCG’s export momentum to continue, as the company is in the process of obtaining US safety certification for three additional cable types, supplementing two already approved products.

HLIB Research highlighted that a key US customer has requested “up to 100 containers per month”, signalling meaningful upside once the group’s new facility is commissioned next year. Order visibility also remains healthy, as SCG’s order book stood at RM1bil as of Sept 30.

Both research houses kept “buy” calls on the group, with target prices of RM2.57 and RM2.59, respectively.

“We continue to like SCG for its role as a proxy for Malaysia’s growing power demand and its position as one of the few vendors supplying US distributors,” Apex Research said.