SCGBHD’s 3QFY25 core net profit came in at RM35.6m (+13.1% QoQ, +73.3% YoY), bringing 9MFY25 CNP to RM96.2m (+98.7% YoY). The results were within expectations, accounting for 75% of our full-year forecast and a slightly higher 78% of consensus estimates.
Since February, the TNB 1+1 contract has already been ~90% called, reinforcing our view that additional call-ups are likely to be triggered in the near term, further supporting earnings momentum.
Production capacity increased by an additional 3,000 km during the quarter, lifting annual installed capacity to 54,980 km, with utilisation remaining high at ~85% on a 24-hour basis.
As of 30 September 2025, orders in hand stood at RM1.0bn, comprising >50% MV and HV, ~40% LV, with the balance from others, representing 0.7x FY24 revenue.
Reiterate BUY with a higher TP of RM2.57 (from RM2.50), based on higher 20x FY26F EPS of 12.9 sen (from 18x), incorporating the recent private placement.
Within expectations. After adjusting for the forex gain (-RM0.4m) and the fair value loss on derivative financial instruments (+RM0.3m), 3QFY25 core net profit came in at RM35.6m (+13.1% QoQ, +73.3% YoY), bringing 9MFY25 CNP to RM96.2m (+98.7% YoY). The results were within expectations, representing 75% of our full year forecast and a slightly higher 78% of consensus estimates.
QoQ. CNP grew 13.1% to RM35.6m, mainly supported by stronger contributions from the power cable segment (segmental gross profit +12.1%). This was driven by a more favourable product mix, with higher contributions from MV and HV cables, supported by increased sales volume amid the recently expanded production capacity (+5.8% to 54,980 km/year) with utilisation remaining high at 85%. Export sales also rose sharply (+40.1%), led by stronger demand from the United States, which likely supported the margin uplift as these products fetch better margins. Evidently, GP margin expanded by 0.9%-pts to 14.5%. Earnings were further supported by increased contributions from battery system installation services for Telekom Malaysia Berhad.
YoY. CNP surged 73.3% to RM35.6m, driven by higher sales volume and a more favourable product mix within the power cable segment, supported by the transition into the new 1+1 TNB contract cycle, which requires a higher proportion of MV cables compared to the previous cycle. This shift contributed to the +4.8%-pts expansion in segmental GP margin to 14.9%. Growth was further supported by a sharp rise in overseas sales (export revenue +103.6%), particularly to the United States, which fetch better margins. These factors, along with economies of scale from expanded capacity, lifted the core PATMI margin by +2.6%-pts to 8.0%.
Outlook. We expect SCGBHD to deliver stronger earnings in 4QFY25, supported by sustained demand from domestic infrastructure works and overseas markets. Since February, the RM403.2m TNB 1+1 contract is already ~90% called, reinforcing our view that additional call-ups are likely in the near term, supported by ongoing grid-upgrade works under RP4, which should sustain SCGB’s earnings momentum. Export momentum is also expected to remain strong, particularly to the United States, with the upcoming UL-certified USE-2/RHW-2 (URD) aluminium cable likely to further support margins. Meanwhile, copper and aluminium prices have increased by more than 8% from August to November, which should lift SCGBHD’s revenue but unlikely to affect the Group’s profitability given its cost-pass-through mechanism. As one of Malaysia’s leading cable manufacturers, SCGBHD is well positioned to benefit from rising grid-related demand, solar development, data centre expansion and strengthening export demand, with order book replenishment expected to remain healthy over the medium term.
Total orders in hand. As of 30 Sept 2025, SCGBHD's orders in hand stood at RM1.0bn, comprising >50% MV and HV cables, ~40% LV, with the balance from other products, representing 0.7x FY24 revenue.
Earnings forecasts. No changes to our earnings forecasts. We have incorporated the recent corporate exercise, namely the private placement which raised RM203.7m, into our projections.
Valuation & Recommendation. We take this opportunity to raise our assigned PE multiple to 20x (from 18x) to reflect SCGBHD’s robust growth outlook, supported by the ~90% call-out on the TNB 1+1 contract and strong demand from national infrastructure works, solar development and data centres. After factoring in the recent corporate exercise, our new TP of RM2.57 (from RM2.50) is based on 20x FY26F EPS of 12.9 sen and incorporates a three-star ESG rating. Reiterate BUY. We continue to like SCGBHD for its (i) role as a proxy for Malaysia’s growing power demand, (ii) increasing demand for HV power cables, and (iii) position as one of the few vendors supplying US distributors.
Risks. Policy Risks. Inability to secure new contracts. Spike in raw material costs such as copper and steel.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.097077 | 4.130856 |
| EUR | 4.800240 | 4.806405 |
| CNY | 0.581645 | 0.582383 |
| HKD | 0.526592 | 0.530422 |
| SGD | 3.164464 | 3.187623 |