PETALING JAYA: Hong Leong Investment Bank (HLIB) Research remains cautious on UMediC Group Bhd
despite raising its earnings forecasts, while Phillip Capital Research continues to see value in the healthcare product maker’s longer-term growth prospects, underpinned by expansion plans and a stronger distribution business.
UMediC’s nine-month core net profit for the financial year ending July 2026 (9M26) rose 3.1% year-on-year (y-o-y) to RM5.6mil, exceeding HLIB Research’s expectations, but within consensus’ forecasts.
The earnings surprise was largely attributed to a lower-than-expected effective tax rate during the quarter.
As a result, HLIB Research raised its FY26 to FY28 earnings forecasts for the group by between 7.1% and 8.5%, mainly reflecting lower tax assumptions.
Despite the upgrade, the brokerage maintained its “hold” call, albeit with a higher target price of 32 sen from 30 sen previously.
The research house said: “Going forward, we forecast a stronger fourth quarter ending July 2026 (4Q26), mainly boosted by the manufacturing division.”
However, HLIB Research cautioned that foreign-exchange movements and plastic input costs remain uncertain, limiting upside potential.
For 3Q26 ended April 30, UMediC posted core profit attributable to shareholders of RM1.8mil, up 1.2% y-o-y, but down 16.9% quarter-on-quarter (q-o-q).
Revenue slipped 7.3% q-o-q to RM12.4mil as a sharp decline in manufacturing sales offset stronger distribution segment performance.
HLIB Research noted that the distribution business continued to benefit from stronger demand for medical devices and consumables from public and private healthcare providers.
In contrast, manufacturing revenue was affected by weaker demand for respiratory related products, a softer US dollar and higher plastic input costs.
Phillip Capital Research described the quarter as “subdued”, but said results were broadly in line with expectations.
It highlighted that 9M26 revenue increased 10% y-o-y to RM40mil, driven primarily by a 19% increase in distribution segment revenue, which more than offset an 8.5% decline in manufacturing sales.
Looking ahead, the brokerage remains constructive on the stock.
It said UMediC is well-positioned for long-term growth, supported by its 3.1-acre leased site in Batu Kawan Industrial Park, which provides room for capacity expansion and product diversification.
The research house also cited the manufacturing segment’s growth trajectory, driven by capacity doubling plans and robust global demand, as well as a healthy pipeline of new products.
It maintained its “buy” recommendation and a target price of 43 sen, arguing that current valuations remain undemanding with the stock trading well below its historical valuation range.
