Southern Cable Group: BUY recommendation amid tariff woes

On April 9, 2025, President Trump suspended country-specific tariffs, implementing a 10% universal tariff on most imports for a 90-day consultation period. SCGB’s US distributor will absorb this 10% tariff.

If the tariff reverts to the previously proposed 24%, the additional cost will be borne by the importer or passed to consumers, with no impact on Southern Cable Group (SCGB’s) margins. SCGB’s products remain competitive in the US due to high quality and cost-efficient production.

Management is confident in achieving FY25 US sales of RM100m (up from RM40m in FY24), supported by expanded product offerings and increased capacity. Two new aluminium cable products are awaiting UL Solutions certification by 3QFY25 for US exports. The US market represented less than 10% of SCGB’s FY24 revenue.

Executive Summary: Southern Cable Group

“We recently conducted a visit to SCGB’s manufacturing plant in Kuala Ketil, Kedah, to gather updates on the progress of its operations and capacity expansion plans.

“All in all, we remain positive on its prospects as the expansion plans are well on track to materialise by FY25F and FY26F which we have already accounted for in our earnings forecasts.

“We maintain our BUY recommendation with an unchanged target price of RM1.71 based on 18.0x PER applied to FY26F fully diluted EPS of 9.5 sen along with three-star ESG rating,” says Apex Research.

The research firm adds that it came away from a visit feeling reassured from a site visit to SCGB’s manufacturing plant in Kuala Ketil, Kedah, supported by re-enforced positive outlook and improved production capabilities.

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