Subsequent to the announcement of its initial public offering (IPO) recently, Cable Solutions Limited (CSLK) – one of Sri Lanka’s leading specialised integrated cable manufacturers – successfully concluded its Investor Forum on the 9th of July 2024. Held as a virtual event, with participants from across the world, the Investor Forum was attended by industry experts, media representatives, and diverse groups of investors – including both local and foreign institutional and individual investors.
The event provided an ideal platform for the company to highlight its robust growth trajectory and commitment to technological advancement, whilst providing a comprehensive overview of its value proposition and strategic direction. The Investor Forum also provided a valuable opportunity for the participants to engage directly with the company’s leadership team, gaining insights into future growth avenues and CSLK’s vision of becoming one of the top 10 cable manufacturers for the electronics industry in Asia and Europe by 2028.
Accordingly, applications for the IPO of CSLK are currently being accepted, providing investors with a compelling value proposition. Meanwhile, the issue, which is being exclusively managed and advised by Asia Securities (Private) Limited, will open on the 23rd of July 2024. At the offer price of LKR 7.50 per share, and based on FY25 forecasted revenue, the IPO is priced at a P/E multiple of 8-9x, as forecasted by KPMG and the company budget. This valuation is at a significant discount of 27-51% based on DCF and market multiple valuations, against regional peers, as per the independent valuation report by KPMG.
With revenues exceeding LKR 3.3 billion in FY23 and exports accounting for 94% of total revenue, CSLK has a proven track record of performance. The company exports to 13 countries, including major economies like the USA, UK, Germany, and India, demonstrating its resilience and adaptability in the global market. As a result, it provides investors with a lucrative opportunity for portfolio diversification, together with considerable insulation against exchange rate risks, and domestic market volatility.
The IPO will see a total of 80,786,600 ordinary voting shares being offered to the public. This will include an offer for subscription of 14,666,600 new shares, and an offer for sale of 66,120,000 existing shares by some non-majority shareholders. Cable Solutions Limited expects to raise a total of LKR 109,999,500/- through the offer for subscription, and these funds will be allocated towards new machinery and production line development (81.8%) and working capital (18.2%). The sale of existing shares of the company, by some of its non-majority shareholders, will be subject to the offer for subscription being fully subscribed.
CSLK has carved a niche for itself in the cable manufacturing industry with its ability to produce highly customised cables for specialised applications. With a strong focus on R&D and a track record of successful market expansions, CSLK is poised for continued growth. Over the years, CSLK has strategically invested in expanding its operational capacities, including acquiring advanced machinery and expanding its harness capabilities. The company’s diversification into high-growth sectors such as automotive, aerospace, electronics, and renewable energy, coupled with its expanding market reach across the USA, Europe, and India, positions it for significant future growth.
The company is also committed to environmental sustainability and sustainable development and growth. This is evident in its various sustainability initiatives, which include recycling water, and incorporating greenery into its operational facilities. CSLK has also taken considerable steps towards reducing its reliance on fossil fuels and achieving energy self-sufficiency through the installation of large solar power generation arrays at its facilities. Through these efforts the company has achieved 100% carbon neutrality and is working towards a net-zero target. These initiatives, combined with its strategic expansion into the electric vehicle and renewable energy markets, underscore CSLK’s focus on sustainable growth, driven by innovation and adaptation to dynamic markets.
CSLK’s IPO thus presents an exceptional opportunity for investors to participate in the growth of Sri Lanka’s leading specialised integrated cable manufacturer. With its innovative product offerings, strong export-oriented business model, and commitment to sustainability, CSLK is well-positioned for robust and sustainable growth, making it an attractive investment opportunity.
