KUALA LUMPUR: The next phase of growth for UEM Edgenta Bhd’s healthcare support services (HSS) will come from new markets such as the Middle East and Indonesia, as well as upsellling services to existing clients.
Low Chee Yen, who is the group’s head of healthcare support (commercial) and chief executive officer of UEMS Pte Ltd said due to the Covid-19 pandemic, demand had grown significantly for HSS in hospitals.
She pointed out that in 2020, the group’s healthcare (commercial) grew revenue by 30% year-on-year while profit before tax increased 75%.
“New projects and additional work came on in 2020, hence the growth in revenue, ” Low told StarBiz, adding that the division had been successful in controlling rising costs and delivering better results.
Low was also cautiously optimistic about sustaining 2020’s financial performance this year, while looking to grow revenue at the same time.
In a statement yesterday, UEM Edgenta announced that it has entered into a memorandum of business exploration (MoBE) with Asma Advanced Solutions LLC to identify strategies to capture healthcare support services and integrated facility management markets in Saudi Arabia.
Asma Advanced is jointly-owned by Progressive Impact Corp Bhd (Picorp) and a Saudi closed joint stock company, Trade House Group Company (THG).
“This marks more opportunities for us to further diversify our revenue stream as we explore new markets in Saudi Arabia, ” said UEM Edgenta managing director and chief executive officer Syahrunizam Samsudin.
Sheikh Abdulwahab said the MoBE has a view of establishing a commercial structure, should the opportunity arise before end-December 2021.
Meanwhile, regarding the division’s staff in-sourcing practise, Low said the group believed that rather hiring contractors who have non-permanent staff, it was better to have staff with permanent contracts and performance incentives.
Low explained that together with training and upskilling programmes, as well as various one-off bonuses and benefits for schoolgoing children of permanent staff, this resulted in higher staff engagement and service efficiency, hence translating into better customer service levels.
“It is really about implementing and achieving best practices, ” she said, adding that the division had hired 2,200 staff in January 2020.
“Since then, we have done a lot of engagement with them and consistently provided training throughout the pandemic, even with all the travel restrictions, ” said Low.
A recent UOB Kay Hian Research report had explained that UEM Edgenta’s HSS consists of concession and commercial businesses.
Concession contracts are mainly for providing services to 32 public hospitals in north Malaysia, under a 10-year contract (until 2025) worth about RM3bil, noted the research unit.
The group also serves 26 and 23 public hospitals in Sabah and Sarawak respectively through its 40%-owned associates Sedafiat and One Medicare (until 2025).
UEM Edgenta has been securing renewals for these concessions for the past 20 years.
In India, the group has a partnership with Apollo Hospitals.
The report said that to diversify away its heavy reliance on concessions, the group grew its commercial business via the acquisition of one of the top regional players, UEMS, in 2016.
Via this acquisition, it expanded its commercial footprint to over 20 private hospitals in Malaysia, and more than 10 and 40 hospitals in Singapore and Taiwan respectively, commanding about 50% of the public hospitals’ market share in those countries, said UOB Kay Hian Research.
“Going forward, UEM Edgenta aims to widen its footprint in the South-East Asia region while also penetrating new growth markets such as Indonesia and Middle East, ” said the research unit.
In the group’s Annual Report 2020, Syahrunizam stated that the healthcare support division had played a pivotal role in supporting national Covid-19 recovery efforts across the region, serving over 300 hospitals in Malaysia, Singapore, Taiwan and India.
“Despite the macroeconomic uncertainties, higher operational costs exacerbated by the pandemic and compressed margins, the division reported higher year-on-year revenue growth supported by key contract wins from both commercial and concession businesses valued at RM1bil representing 71% of all new contracts for the year, ” he said.
Syahrunizam pointed out that notable wins include biomedical engineering maintenance services (BEMS) contracts for the Sarawak General Hospital in Malaysia, replacement through maintenance (RTM) contracts for the Ministry of Health Malaysia, and four soft services contracts, mainly in public and environmental health-related operations, for Sengkang General Hospital and Changi General Hospital in Singapore, and for Cheng Hsin General Hospital and Yang Ming University Hospital in Taiwan.
These contributed to the division’s revenue of RM1.23bil and profit before tax of RM97.3mil.