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A Brief Discussion on UMC's Second Quarter Performance (Q2 FY2024)

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Publish date: Sat, 16 Mar 2024, 11:21 AM
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Post-pandemic, Malaysia's medical industry, aside from glove manufacturing, continues to experience rapid growth. According to the Malaysian External Trade Development Corporation (MATRADE), the total export value of Malaysia's medical sector reached RM28.10 billion in 2023, marking an increase of approximately 51.89% compared to around RM18.50 billion in 2022. Of this, medical devices and equipment accounted for 30.00%, totaling RM8.35 billion, while needles, syringes, sutures, and catheters comprised 20.00%, or RM5.66 billion.

Just a few days ago, a prominent Malaysian medical equipment distributor, UMedic Group Berhad (UMC, 0256), announced impressive financial results, once again surpassing the RM10.00 million revenue mark. Before delving into the performance, let's first take a brief look at UMC.

According to UMC's official website, the company was established in 2002, headquartered in Batu Kawan, Penang. UMC primarily engages in the marketing, distribution, and after-sales service of medical devices and consumables, as well as involvement in manufacturing and research and development of medical consumables. As an authorized distributor of several internationally renowned medical device companies such as PHILIPS, MINDRAY, GE, and MERIT, the company sells its products to both public and private hospitals, healthcare service providers, and non-medical businesses, providing comprehensive after-sales services. Additionally, UMC successfully launched its own brand of HydroX series prefilled humidifiers and AirdroX series inhaler spacers, which are sold worldwide.

Based on annual report data, the marketing and distribution segment accounted for approximately 67.08% of the total revenue for the financial year 2023, with the remaining approximately 32.92% generated from manufacturing operations. While UMC's market extends globally, the majority of its revenue is derived from Malaysia, comprising approximately 67.76% of the total revenue for the financial year 2023. The remaining 32.24% comes from overseas markets, including Europe (14.02%), Asia-Pacific* (12.74%), the United States (3.37%), Oceania (0.86%), the Middle East (0.79%), and Africa (0.46%).

*Asia-Pacific region, besides Malaysia, includes countries such as South Korea, Brunei, Jordan, Myanmar, the Philippines, Thailand, India, and Indonesia.

UMC was listed on the Malaysian Stock Exchange's ACE Market on July 26, 2022. Notably, UMC's major shareholders and founders, Dato' Wong Chai Yong and Mr. Lim Chun Hong, are also founders and shareholders of another listed company, UWC (5292).

Revenue Comparison (YoY +7.68%, QoQ -7.18%)

For the second quarter ending January 31, 2024, the company's revenue stood at approximately RM13.48 million, a 7.68% increase from around RM12.51 million during the same period last year. This growth can be attributed to increased demand for medical devices and consumables from both public and private hospitals and healthcare service providers, driving revenue growth. Additionally, sales of UMC's own medical consumables also contributed to revenue growth.

However, compared to the previous quarter, the company's revenue decreased by approximately RM1.04 million or 7.18%. This decline was primarily due to reduced orders in the marketing and distribution segment.

Of the RM13.48 million revenue, approximately RM8.72 million came from the company's marketing and distribution business, representing a year-on-year increase of approximately 7.07%, but a quarter-on-quarter decrease of approximately 13.72%. The remaining approximately RM4.76 million revenue came from manufacturing business, with a year-on-year growth of approximately 8.82% and a quarter-on-quarter growth of approximately 7.76%.

(Note: UMC's fiscal year ends on July 31 each year)

Net Profit Comparison (YoY -14.74%, QoQ +31.28%)

Despite overall business growth, the company's net profit decreased by approximately 14.74% year-on-year to approximately RM2.48 million, attributed to increased operating expenses and taxes.

However, a higher gross profit margin resulted in a quarter-on-quarter net profit increase of approximately RM0.59 million or 31.28%.

It's worth mentioning that UMC is a net cash company, holding approximately RM5.92 million in cash for the quarter, with borrowings of approximately RM1.22 million.


UMC submitted an application to the Securities Commission to transfer to the Main Market by the end of last year. Therefore, it is expected that the company will successfully transition from the ACE Market to the Main Market within this year.

The company's manufacturing expansion plans are progressing smoothly, with relocation to a new factory completed. Production capacity is expected to increase by 40.00% starting April this year, reaching 420,000 bottles per month, and further increasing to 600,000 bottles per month by December.

Furthermore, the company has ventured into the laboratory sector through the acquisition of Patho Solutions (M) Sdn Bhd, further expanding its market coverage in the medical industry.

With these developments in mind, are readers looking forward to UMC's future prospects and profitability?


Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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