Malaysia’s Premier Wires and Cables Manufacturer - Master Tec Group Berhad

Core Business
1.Manufacturing and distribution of power cables (Low Voltage and Medium Voltage), control and instrumentation cables, and other related products
2.Trading of power cables, fiber optic cables, and other related products

Figure 1: The business model of Master Tec Group Berhad

Company Outlook & Prospect (from AR 2023)
1.The sales of wires and cables in Malaysia continue to be strong with an average annual sales figure of RM9567.40M between 2018 and 2022.
2.The demand for power cables is expected to grow stronger, especially with the launch of / ongoing mega infrastructure projects like the Light Rail Transit (LRT) 3 project, the Mass Rapid Transit (MRT) 3 project, the Bayan Lepas Light Rail Transit project, and the West Port Expansion project, etc.
3.The facilitating plans include the Malaysia Renewable Energy Roadmap (MyRER), which drives the high demand for wires and cables.
4.The group is expanding its core business to the manufacturing of Medium Voltage (MV) cable and is believed to build on the 3.57% industry market share.

Financial Highlights
1.From FY2020 to FY2023, the PAT was increased from RM5.26M to RM23.51M, with a CAGR of 64.72%. Thus, it can be seen as a growing demand for cables for sectors like data centers, infrastructure projects, etc.
2.From FY2022 and FY2023, it was noticed that the change in revenue segments for LV cables (copper-cored & aluminum-cored) dropped from 93% to 91% with a slight difference of 2%. Nonetheless, the contribution from MV cable is expected to have a positive impact on the group.
3.Besides, the net CFO (cash from operating activities), has shown a sharp increase of RM21.162M between 2022 – 2023 with the recorded net CFO of RM15.935M and RM37.097M in FY2022 and FY2023 respectively.

Figure 2: Total assets, total equity, and total liabilities of Master Tec Group Berhad

Figure 3: Revenue, PAT, and PAT margin of Master Tech Group Berhad

Figure 4: Revenue segment for FY2023 and FY2024 of Master Tech Group Berhad

Previous Activities;
Mtec was successfully listed on Bursa Malaysia on 29 Jan 2024. Based on the prospectus, there’s roughly RM16.783M or 27.22% from the raised capital with the amount of RM61.66M to be utilized in constructing new MV power cable manufacturing plants. Interestingly, the group IPO debuted at RM0.39, however, it further dropped to RM0.36 on the first day of listing which translated into a 7.69% loss. Nonetheless, Mtec boosted its price to the highest price of RM1.69. As of 4 July 2024, the closing price was RM1.18, 202.56% higher than its IPO price.

Personal Opinion;
-Mtec is one of the cable and wires manufacturers and providers, which may benefit from the current government plans and policies.
-There are several related companies listed such as He Group Berhad and Southern Cable Group Berhad and thus, investors should also analyze its fundamentals as well as the company’s future outlooks.
-The driving catalyst for the current situation might be the future/ongoing infrastructure projects, data centers, etc. which may boost the demand for cables and wires.
-The downside risk can be the price fluctuation of aluminum and copper, which are the raw materials for the group, and the increasing concentration of a single customer, which is TNB that contributed to the group’s total revenue from 10.55% in 2020 to 29.16% in 2022.

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By: Jshen Ng