PETALING JAYA: Trade war fears between the United States and China are crushing sentiment and the markets, but UEM Edgenta Bhd is confident that it will record double-digit growth in profit this year.
Managing director and chief executive officer Datuk Azmir Merican said the growth would be driven through improvement in operational efficiency and automation and mechanisation that would improve its margins, as well as new contract wins.
He said UEM Edgenta has allocated RM80mil for capital expenditure (capex) this year in technology and innovation for its infrastructure services division, including process improvement and in-house road pavement products.
“We want to reduce our dependence on foreign labour and invest more in machines and cloud-based software,” he said after UEM Edgenta’s AGM yesterday.
“For this year, we are also targeting to test two of our own road pavement products, which would reduce the maintenance hours,” he added.
He said UEM Edgenta had invested a total of RM100mil in capex for its infrastructure service division over the past three years.
Presently, UEM Edgenta’s order book stands at more than RM13bil, anchored by the infrastructure division with 65% or RM8.72bil worth of jobs, while healthcare made up about 28% or RM3.75bil, with the remaining in property solutions and the consultancy segment.
He said UEM Edgenta is targeting to expand its healthcare support services in India and is bidding for more jobs in Singapore.
“The jobs we have now can last between five and 20 years, and we are are continuously seeking more contracts in Malaysia and other markets, one of which is India,” Azmir said.
For India, he said UEM Edgenta started in the country by providing house-keeping services in hospitals, and currently, the company is managing 150 hospitals.
“Now, we want to move into biomedical and hospital equipment maintenance service that would fetch better margins and is less labour-intensive,” he said.
For Singapore, Azmir said the firm is targeting to win more contracts in the healthcare sector, as the government there is looking to restructure the public healthcare sector into three integrated clusters.
“We are looking at longer-term maintenance contracts in Singapore that would provide sustainable earnings for the group,” he said.
Azmir said for the financial year ended Dec 31, 2018 (FY18), UEM Edgenta posted a 22% year-on-year increase in net profit to RM152.2mil from RM125.1mil based on continuing operations.
“In FY17, we made RM274mil gains from the disposal of Opus International Consultants Ltd and that subsidiary’s profits were included during that year,” he said.
He said the improvement in UEM Edgenta’s profitability in FY18 was due to margin improvements from operational processes in its healthcare services division.
“We are aiming to replicate what we did with the healthcare support services segment to the infrastructure services business this year,” he said.
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