KUALA LUMPUR: Southern Cable Group Bhd has targeted to achieve RM100 million sales of cables and wires to the US in the year ending Dec 31, 2023 (FY23).

The cable and wire manufacturer said it would begin deliveries to a US-based cable and wire distributor in the fourth quarter (Q4) of 2022.

Managing director Tung Eng Hai said gaining entry into a much larger foreign market than the company's current domestic reach had boosted its potential addressable market.

"We are in the process of planning our production capacity for anticipated larger orders to the US next year and are confident of expanding our US customer base, leveraging on our competitiveness and product quality.

"We also have the capability to produce cables and wires for wide-ranging sectors including power distribution, construction, telecommunication, and oil and gas,"  he said in a statement today.

Tung said in its efforts to target more export opportunities to the US, the company would continue developing more products and obtaining certifications to cater to a broader range of industry requirements.

According to market research company Global Market Insights, the North American cable and wire market size exceeded US$27 billion in 2020 and it was projected to expand at a cumulative annual growth rate of six per cent from 2021 and 2027 to reach US$44.5 billion.

In contrast, the Malaysian cable and wire market was valued at RM10.3 billion in 2019.

Southern Cable has current orders in hand of more than RM800 million to be fulfilled for Malaysia and overseas customers until 2024.

The orders in hand include a RM294 million underground power cable supply contract secured from Tenaga Nasional Bhd and RM12 million worth of purchase orders from its US-based customer.

At the company's extraordinary general meeting today, shareholders approved a bonus issue of warrants on the basis of one warrant for every two existing Southern Cable ordinary shares held.

The issuance comprises 400 million five-year warrants with an option for warrant holders to exercise one warrant to subscribe for one new Southern Cable share.

At an indicative exercise price of 28 sen per warrant and assuming full exercise of the warrants before maturity, the company is aiming to raise RM112.2 million in gross proceeds for working capital purposes.

Of the RM112.2 million gross proceeds, 80 per cent or RM89.7 million are to be utilised for raw material purchases, while the balance 20 per cent or RM22.4 million are to be utilised for parts, maintenance costs and other related costs for plant, machinery and equipment, as well as operation overheads including labour costs, utilities and other factory overhead expenses.

Tung said proceeds from the warrants exercise would provide additional working capital to support its business growth.

"Not only that, the exercise of our warrants can also allow our shareholders to increase their ownership in Southern Cable to participate in our long-term prospects," he said.