UEM Edgenta sees better bottom line for FY2023 despite higher operating costs

KUALA LUMPUR (March 1): Despite facing higher operating costs amid cost-inflation pressure, UEM Edgenta Bhd is anticipating a better bottom line performance for the financial year ending Dec 31, 2023 (FY2023).

There has been concern about the group's profit growth due to cost escalation related to higher repair and maintenance costs for some hospitals and incinerator plants, as well as the increase in the minimum wage for the hospital division.

In addition, the group also faces margin compression for projects in its property and building solutions segment due to the global supply chain disruption.

UEM Edgenta chief financial officer Hillary Chua said the group was determined to take cost optimisation measures and deploy technology-enabled solutions to weather the headwinds.

"We will also discuss and work closely with our suppliers on how they can reduce their working capital costs. In this way, we will be able to reduce our procurement costs. Procurement is the starting point of all costs," she said at a press conference Wednesday (March 1).

The asset management and infrastructure solutions-based group’s net profit increased 9.23% to RM45.88 million for FY2022, from RM42 million a year earlier. Revenue improved 10.09% to RM2.52 billion from RM2.29 billion.

As at Dec 31, 2022, the group had an outstanding order book of RM9.6 billion, with the infra services being the largest component at 68% or RM6.58 billion, followed by healthcare support (RM2.51 billion), property and facility solutions (RM334 million) and asset consultancy (RM178 million)

The group’s gross gearing as at that date stood at 0.29 times with a net cash of RM247.9 million.

UEM Edgenta plans to expand its business into international markets, focusing on integrated facilities management and the deployment of software-as-a-service (SaaS) platform solutions. This will be reinforced by reinvesting in new growth markets, products and technologies in the Gulf Cooperation Council countries, particularly Saudi Arabia.

“We are cautiously optimistic for this year. But we expect the higher revenue for FY2022 to carry through in FY2023. And we are hoping that this will translate into a higher profit margin for this year,” said Chua.

On capital expenditure for FY2023, Chua said it will be similar to the RM80 million to RM90 million capex level in the past two years.

"About 40% of that, we plan to invest in digital and technology developments as that is the target to grow and optimise our business," she added.

Shares of UEM Edgenta closed up 3.19% at 97 sen on Wednesday, giving the group a market capitalisation of RM802.47 million.