Phillip Capital Research said the company's transfer to the Main Market should provide near-term share price support.
PETALING JAYA: Medical device maker UMediC Group Bhd
(UMC) is expected to post stronger second half financial year 2024 results on the back of expanded manufacturing capacity and better marketing and distribution segments, according to Phillip Capital Research.
“We believe the strong expected earnings, driven by the commencement of the company’s new factory and launch of the care-centre business will serve as the next re-rating catalyst. The transfer to the Main Market, slated for completion by June this year, should provide near-term share price support.
“Downside risks to our call include a potential slowdown in medical-equipment demand, operational disruptions, and the loss of licences,” the research house added.
In its second quarter ended Jan 31, 2024, the company’s net profit fell to RM2.5mil compared with RM2.9mil in the same quarter last year.
Revenue, however, rose to RM13.5mil against RM12.5mil posted a year earlier. Earnings per share for the period fell to 0.66 sen from 0.78 sen previously.
In the first six months to Jan 31, UMC posted a lower net profit of RM4.4mil from RM4.9mil, while revenue expanded RM28mil from RM23.8mil a year ago.
The company’s new plant began operations in March of this year. The medical-device maker has relocated its warehouse to the new facility to facilitate the expansion of its cleanroom facilities. The group’s monthly production capacity currently stands at about 420,000 bottles per month, a 40% increase from the previous 300,000. The production capacity is expected to reach 600,000, effectively doubling its previous capacity, by December of this year.
With the expansion in the capacity, UMC is venturing into the Latin American market to sell its products.
“We gather that the current workforce of 150 workers is sufficient to cater to the increased monthly production of up to 600,000 bottles through increased automation,” the research house noted.
The brokerage is reiterating its “buy” rating and target price at RM1.08, based on an unchanged 25 times price-earnings multiple on FY25 earnings per share.
