Cable Solutions Limited (CSLK), a leading specialised integrated cable manufacturer in Sri Lanka is firmly focused on anticipating and addressing future technological challenges. As CSLK gears up for its initial public offering (IPO), set to open on the 23rd of July 2024, the company is leveraging its future-facing ethos – which has delivered robust growth and market leadership – to present a compelling proposition to investors.
A Future-Facing Investment with Strong Potential for Sustainable Growth
With its impressive potential for sustainable growth, supported by strong revenue performance and export orientation, CSLK also provides investors with a future-facing investment opportunity. In the fiscal year 2023, CSLK achieved revenues exceeding LKR 3.3 billion, with exports to 13 countries making up 94% of this total. The company’s expansive market reach, which includes major economies such as the USA, UK, Spain, Italy, Germany, Sweden, Switzerland, Russia, India, Australia, and New Zealand, highlights its ability to meet stringent international standards and capture global markets.
CSLK’s export-oriented business model also provides significant advantages to investors, including insulation against exchange rate risks and domestic economic volatility. For investors, this international focus translates into unrestricted growth potential and a more stable return profile. The upcoming IPO, priced at LKR 7.50 per share, offers a compelling value proposition. With an implied P/E ratio of ~8-9 times based on FY2025 earnings forecast (by Company and independent valuer KPMG respectively), CSLK’s financial metrics are notably more favourable than those of its peers, reinforcing its strong market position. The company’s innovative product offerings, focusing on high-growth sectors, and proven track record further enhance its attractiveness as an investment.
Anticipating and Addressing Technological Challenges
CSLK’s ability to foresee and tackle future technological hurdles stems from a proactive approach and strategic foresight. A prime example is the company’s shift to in-house connector manufacturing for cable harnessing, which previously relied on imports. This initiative not only streamlines the supply chain but also enhances product quality and customization. The company also regularly revises its technological roadmaps to integrate the latest advancements and mitigate potential risks. Additionally, the company has created an extensive virtual factory tour and product portfolio to make its customer pitches more effective and tangible, enhancing its competitiveness with global rivals.
Driving Research and Development
Research and development (R&D) is the cornerstone of CSLK’s strategy to stay ahead in the industry. The company’s R&D efforts are highlighted by projects such as improving line speed through innovative colourants with lower melting points and other processes to optimise raw material usage, particularly copper. These initiatives not only boost efficiency but also contribute to sustainability. The success of CSLK’s R&D investments is attested to by its consistently expanding list of international clients and its penetration into multiple, highly-competitive markets.
Leveraging Long-Term Industry Trends
CSLK’s strategic focus on long-term industry trends positions it as a leader in the market. As an example, the company is capitalising on the significant growth in renewable energy and the expansion of the electric vehicle (EV) industry. These sectors are undergoing aggressive transitions, and CSLK’s investments in solar cables and high-tech automotive solutions align perfectly with these trends, as more of the world adopts cleaner transport.
Maintaining and Enhancing Competitive Edge
To maintain and enhance its competitive edge, CSLK employs a multifaceted strategy. The company’s focus on quality, strong engineering and R&D capabilities, and internationally-recognised certifications make it a preferred choice for customers. Recent investments in new machinery and improvements in production processes have significantly bolstered CSLK’s operational efficiency. More such improvements are planned in the future and are slated to be funded by the proceeds of the company’s upcoming IPO.
In this effort to remain competitive, CSLK has obtained several international quality certifications, including for environmental and sustainability management. These include ISO 9001:2015 for quality systems management, ISO 14001:2015 for environmental systems management, and TUV Rheinland certification for manufacturing solar cables to BS EN 50618 standards.
Embracing Emerging Technologies
Emerging technologies will have a profound impact on the cable manufacturing industry. Anticipating this, the company is actively integrating advancements such as AI, automation, and further digitalisation into its operations. This is helping to further enhance production efficiency, reduce costs, and improve product quality. Thus, as Cable Solutions Limited moves towards its IPO, its future-facing nature, underpinned by robust R&D, strategic foresight, and a commitment to quality and innovation, positions it for unparalleled growth and success in the competitive global market.
The issue opens on 23rd July and will see a total of 80,786,600 ordinary voting shares of the company offered to the public, through a combination of an offer for subscription of 14,666,600 new ordinary voting shares and an offer for sale of 66,120,000 existing ordinary voting shares. The funds raised from offer for subscription of LKR 109,999,500/- will go towards machinery and production line development (81.8%) and working capital (18.2%). Broad-based interest is expected, including from overseas investors. View the prospectus at www.cse.lk.
