UMC 0256 UMEDIC GROUP BERHAD | A Growing Company (Q3FY2023)

 UMC 0256 UMEDIC GROUP BERHAD | A Growing Company (Q3FY2023)

With the advancement of global medical technology and increased cross-border collaborations, the research, development, and manufacturing of high-end medical devices have been continuously improving. The application of new materials, sensors, artificial intelligence, and machine learning technologies has greatly facilitated the innovation and progress of high-end medical devices.


Just a few days ago, UMedic Group Berhad (UMC, 0256), a high-end medical equipment provider, released an impressive performance report, leading to a surge in the company's stock price.



Let's briefly comprehend this company’s background. Headquartered in Penang, UMC was established in 2002 and went public on the ACE Market in July 2022. The company is primarily engaged in the manufacturing, marketing, and after-sales services of various medical devices. It is worth mentioning that the company holds distribution rights for multiple international medical equipment companies, including GE Healthcare, Mindray, and Philips. In addition, UMC develops and manufactures its own brand of medical products, namely the HydroX series of prefilled humidifiers and the AirdroX series of asthma spacers.


To date, UMC has provided professional medical equipment and related services to thousands of customers, including public and private hospitals, healthcare service providers, hotels, airports, factories, and more, spanning over 30 countries worldwide. According to the 2022 annual report, UMC's customers are primarily from Malaysia, accounting for approximately 80.09% of the total revenue for the 2022 financial year. The Asia-Pacific region, including South Korea, India, Indonesia, Myanmar, the Philippines, Thailand, and Brunei, accounted for approximately 10.29% of the revenue. The remaining markets include Europe (6.84%), the United States (1.78%), the Middle East (0.47%), Oceania (0.35%), and Africa (0.18%).


Now, let's discuss UMC's latest performance in Q3FY2023.


Revenue Comparison (YoY +48.22%, QoQ -23.40%)


For the third quarter ending on April 30, 2023, the company achieved revenue of approximately RM9.59 million, an increase of approximately RM3.12 million or 48.22% compared to the same period last year, which was around RM6.47 million. This growth was primarily due to increased demand for medical devices from both public and private hospitals, as well as healthcare service providers. Additionally, the management stated that the revenue growth was also driven by increased sales of the company's HydroX and AirdroX products.


However, compared to the immediate preceding quarter, the company's revenue decreased by approximately RM2.93 million or 23.40%. This was due to a decline in sales of medical devices.


Net Profit Comparison (YoY +58.13%, QoQ -29.89%)


Benefiting from favorable foreign exchange rates and the growth in sales of medical devices and related products, the company's net profit increased by approximately RM0.75 million or 58.13% year-on-year, reaching around RM2.04 million.


As mentioned earlier, due to the decline in medical device sales this quarter, the company's net profit decreased by approximately RM0.87 million or 29.89% compared to the immediate preceding quarter.


Outlook


This year, the Malaysian Ministry of Health received a budget allocation of approximately RM36.30 billion through Budget 2023, which is higher than the previous year's allocation of around RM32.40 billion. This indicates that the government places significant emphasis on the domestic healthcare sector, which is good news for UMC. Therefore, the management remains confident about the company's future profit growth.


So, what are your thoughts on UMC, currently trading at a price-to-earnings ratio (P/E) of approximately 36.58?


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