UEM Edgenta plans healthcare expansion in Singapore

The company is riding on Singapore’s public healthcare sector as it is expected to undergo a major restructuring


UEM Edgenta Bhd plans to expand its presence in the healthcare segment in Singapore as the segment continues to fuel the service provider’s revenue and earnings.

Group MD and CEO Datuk Azmir Merican said Singapore’s public healthcare sector is expected to undergo a major restructuring and the move will provide UEM Edgenta with the opportunity to bid for more hospital contracts.

“Singapore’s Ministry of Health is restructuring the public healthcare sector into three integrated clusters from an initial six regional health systems.

“So with that good news, we are looking to bid for more hospitals and increase our market share to place us on the top,” he said at the company’s financial year 2018 (FY18) media briefing in Kuala Lumpur yesterday.

Azmir said for the FY18, both the commercial and concession businesses of the healthcare sector contributed 54% of the company’s revenue, and the sector is expected to continue on its growth path this year.

“It has been a great 2018 for us, especially the healthcare businesses in Singapore and Taiwan, and by winning more projects this year, we would record higher profit,” he added.

UEM Edgenta’s FY18 revenue from the healthcare sector rose 8% year-on-year (YoY), fuelled by new contracts from Singapore and Taiwan, coupled with high customer retention rate of almost 90% in its commercial business.

On the local front, Azmir said the continuous sharing of best practices and technology transfer between its concession and commercial business in government hospitals had pushed UEM Edgenta’s healthcare support division higher.

“This year in Malaysia, we are looking into cross-selling and sharing of best practices between our concession and commercial business.

“Since the government presented a 7.8% YoY increase in the budget allocation for public healthcare spending, it will augur well for UEM Edgenta as we are looking to partner with the government on more initiatives,” he added.

UEM Edgenta has secured several notable contracts, namely for the provision of hospital support services to the Ministry of Health’s nine Klinik Kesihatan in Penang and Cardiac Vascular Sentral Hospital in Kuala Lumpur, National Taiwan University Hospital and Taipei Medical University Hospital in Taiwan, Tan Tock Seng Hospital, Assisi Hospice and Jurong Medical Centre in Singapore.

In addition, the company was awarded a contract for the new Women and Children Hospital in Kuala Lumpur.

“All these new projects will be accretive for this financial year,” Azmir said.

Azmir also said the group has a pipeline of new projects for the healthcare and infrastructure segments.

“We remain positive of our prospects in healthcare support and infrastructure services. We are also exploring opportunities to provide project management services for new highways and roads,” he said.

As of Dec 3, 2018, UEM Edgenta’s work-in-hand stood at RM13.4 billion.

It’s net profit for the fourth quarter ended Dec 31, 2018 (4Q18) dropped 79.15% YoY to RM67.73 million due to the absence of a one-off gain during the same quarter a year ago.

The group recognised a one-off gain of RM270.8 million from the disposal of Opus International Consultants Ltd (OIC).

For the full financial year, UEM Edgenta’s net profit fell 64.55% YoY to RM148.24 million but revenue increased 2.83% YoY to RM2.18 billion.

“Excluding the discontinued operation from the previous year’s numbers, our net profit for FY18 was 22% higher at RM152.2 million against RM125.13 million recorded previously.

“We made our decision to capitalise on the sale of OIC in FY17 which had paid off well as we pared down debt, redeployed cash and rewarded shareholders,” Azmir said.

The company has declared a second interim dividend of eight sen payable on May 9, resulting in a total dividend payout of 14 sen for FY18, representing a yield of 5.1% based on share price as at Dec 31, 2018.