UEM Edgenta sees year of growth


  • Business
  • Wednesday, 06 Mar 2019

StarBiz's Interview With Azmir Merican / UEM Edgenta. The Star/Sia Hong Kiau

KUALA LUMPUR: UEM EDGENTA BHD is anticipating another year of growth in 2019 amidst expectations that there will still be challenges up ahead.“Last year was a year where we grew profitability.

“We grew revenue in the financial year 2018 (FY18 ended Dec 31) but this growth was outstripped by the growth in profits.

“In FY19, we think we can grow both.

“We expect the strongest growth engine this year will come from healthcare followed by our other businesses - infrastructure services and the property and facility solutions,” Edgenta CEO Datuk Azmir Merican said in a press briefing yesterday.

“We are a strong dividend yield stock at 5.1% dividend yield.

“But we also offer a growth potential thus we do offer a very interesting investment proposition,” its chief strategy and transformation officer Shahazwan Harris said in the presentation yesterday.

The company expects to drive better margins by replicating what it did with the healthcare support services segment to its infrastructure services business.

According to its presentation, Edgenta’s healthcare support services (concession) business saw the segment’s net profit growing year-on-year (y-o-y) by almost 10% to RM41.9mil despite the revenues dropping by 0.7% y-o-y to RM463.6mil. “We expect to drive better margins this year. Even a 1% improvement in margins on an RM800mil odd (revenue) is quite significant. Take a look at what we have done in the healthcare segment where margins have grown.

“So we will take the same formula to apply it to the infrastructure services business. We expect it to work and we think that by the end of this year there should be results,” Azmir said.

Explaining how it managed to grow the healthcare support services (concession) profits despite the decline in revenue for the segment, Azmir said it was done through improvements in efficiency.

“In this healthcare concession business, we had to get better at what we do.

“We look at how we do the same amount of work but do it better. We rolled out new technology to put all the work on a cloud based software so we know all the activities we are doing and we understand the work to monitor,” Azmir said.

“Secondly, we monitored the projects closely to see how we can save costs during implementation.

“We looked at what were the biggest cost items in this business and then we decided how to reduce these big cost items because this will have an impact,” he added.

Overall, he said the company always aimed to increase the use of technology, reduce labour costs and intensify software systems application.

Edgenta is also hoping to secure more projects in Singapore in the healthcare support services (commercial) business segment given that the government there is looking to restructure the public healthcare sector into three integrated clusters.

“We are not the biggest player in Singapore. But what we want to do is to win more market share by offering better solutions and rationalise our margins,” Azmir said.

Edgenta also took the opportunity yesterday to explain its financial results released last week that saw net profits for FY18 falling drastically on the surface.

It noted that net profits from core and continuing operations had actually risen by 22% y-o-y to RM152.2mil when excluding the extraordinary items in FY17 to compare actual like-for-like figures.

The extraordinary items are the one off disposal gain of Opus International Consultants Ltd of RM274.9mil and the share of Opus’ profit that was included then.

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