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[UMC] UMEDIC GROUP BHD [0256] - Is There Going to be a Chinese New Year Rally This Week?

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Publish date: Tue, 17 Jan 2023, 01:37 PM
You Never See It Coming...

About Us | UMediC Group

UMediC Group made its debut on the Malaysian stock market on July 26, 2021, with an offering price of 32 cents per share. Since then, the stock price has reached a high of 90.5 cents per share and a low of 43 cents. Currently, the stock is trading around 70 cents, with a fair premium for holding the stock.



The company's first results, announced in September 2021, were for the fourth quarter and full year ending July 2022. The net profit for the fourth quarter was RM568,000 and the annual net profit was RM6.426 million. Excluding one-time listing expenses, the core net profit for the year was RM8.4 million, a 50% increase year-over-year. The fourth quarter turnover was RM7.411 million, and the annual revenue was RM50.738 million, a 48.7% increase.

The company's most recent results are for the first quarter of the 2023 fiscal year ending October 31, 2022. The net profit increased by over 200% quarter-on-quarter to RM2 million, and the core net profit rose by 40.5% to RM1.8 million. The turnover in the first quarter increased by 52.7% quarter-on-quarter to RM11.3 million. The company's first-quarter performance growth was attributed to the marketing and distribution division, which saw revenue growth of 96% quarter-on-quarter.

UMediC shares optimism following improved 3Q result | The Star

The CEO of the company, Lim Taw Seong, believes that the increasing awareness of global health will continue to drive demand for medical equipment and consumables, thereby catalyzing the company's business growth.

However, a research report by Hong Leong Research showed that the company's performance in the first quarter was below expectations, mainly due to a global chip shortage affecting shipments and resulting in lower-than-expected revenue. The report also highlighted that the company's revenue in the first quarter came from both public and private demand for medical equipment and consumables, which was also partly due to seasonal factors. The report also noted that orders from the public sector will generally be stronger in the second half of the year and that favorable exchange rates also helped the company's revenue performance.


AirdroX, a division of the company that deals with manufacturing, started operations at the end of June, but even with the full-quarter contribution, revenue performance was flat due to scheduled line maintenance. As a result of this, Hong Leong Research has lowered its financial forecasts for the fiscal years 2023 and 2024 by 3 to 9%. The core net profit is estimated at RM10.8 million and RM13.6 million respectively, and the net profit forecast for 2025 is RM18.6 million.

Despite the company's below-expected performance in the first quarter, Hong Leong Research has a positive outlook for the company's long-term growth prospects due to the new government of Malaysia's plans to gradually increase public health expenditure to 5% of the GDP in the next 5 years. This will drive an increase in the government's purchase of medical equipment and consumables, which will be beneficial for UMediC Group.

In conclusion, UMediC Group has shown strong financial performance in the past year with a 50% increase in core net profit and a 48.7% increase in annual revenue. The company's CEO, Lim Taw Seong, believes that the increasing awareness of global health will continue to drive demand for medical equipment and consumables, thereby catalyzing the company's business growth. Though the company's first quarter performance was below expectations due to a global chip shortage and scheduled line maintenance, the long-term growth prospects of the company remain positive. The new government of Malaysia's plans to gradually increase public health expenditure to 5% of the GDP in the next 5 years will drive an increase in the government's purchase of medical equipment and consumables, providing a boost to UMediC Group's business. Therefore, this is the right time to buy the stock of UMediC Group as the growth prospects are optimistic, and the company is well-positioned to take advantage of the increase in demand for medical equipment.

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