KUALA LUMPUR: New contracts support services in Singapore and the extension of the concession period as maintenance contractor for North-South Expressway could drive UEM Edgenta Bhd’s earnings in the future, analysts said.
Hong Leong Investment Bank Bhd (HLIB) said UEM Edgenta’s defensive earnings profile and pivot towards healthcare support services regionally remain a good exposure to a stable earnings stream.
The firm kept its “buy” call on UEM Edgenta with an unchanged target price of RM3.56.
MIDF Research said UEM Edgenta was on track to meet its earnings projection, premised on stable performance of each business segment and the improved performance from the infrastructure services.
“We upgrade the stock to a ‘buy’ with unchanged target of RM3.22 per share. However, we expect margin compression in its commercial healthcare support division as well as the lacklustre performance from its asset consultancy divisions to weigh on earnings growth going forward.”
MIDF Research believes improving performance of its healthcare concession as well as the IS divisions will cushion the impact on earnings from the three divisions as evident in the commendable margins reported by these two divisions.
UEM Edgenta’s net profit for the fourth quarter ended December31, 2019 jumped 43.53 per cent to RM97.49 million from RM67.92 million, while revenue rose 10.03 per cent to RM712.26 million from RM647.35 million previously.
Higher earnings were due to contribution from all three businesses segments including asset management, infrastructure solutions, and property development.
For the full-year, its net profit increased 22.47 per cent to RM181.78 million from RM148.43 million, while revenue grew 10.47 per cent to RM2.41 billion from RM2.18 billion.