KUALA LUMPUR (Aug 26): UEM Edgenta Bhd has saved RM27.5 million in 2021 and has a target to save another RM12 million in 2022 under its five-year plan to save a total RM100 million, according to its managing director and chief executive officer Syahrunizam Samsudin.
The asset management and infrastructure solutions company had unveiled the Edgenta of the Future 2025 (EoTF 2025) in March last year, predicated on operating efficiency and cost efficiency.
“We have a target to reduce our costs by RM100 million over five years. And I think last year, we recorded about RM27.5 million already in terms of cost savings. This year, we are tracking about RM12 million,” Syahrunizam said.
“So, we are in good shape. I mean, we continue to find ways and means to reduce our cost base and not just in terms of staff rationalisation, but a whole host of other costs, corporate costs, direct costs, and just efficiency from process optimisation which we will continue to do.”
He was speaking to the press on Friday (Aug 26) after UEM Edgenta’s briefing on the company’s financial results for the first half of financial year 2022 (1HFY22).
UEM Edgenta chief financial officer Hillary Chua said: “Technically, if you look at where we are today, we are probably about 40% of the target. And we still have about more than three and a half years to go.
“So I think we will probably be able to do a bit more. But of course, we are taking cognisance of the fact that we have all the external headwinds that we have today [which are] the global supply chain [disruption] and the inflation that we see in the market.”
During the briefing, Chua said UEM Edgenta is expecting challenging conditions ahead.
She said cost escalation and inflation have not impacted its latest quarterly results, and noted that occasionally, suppliers have sought to revise contract prices.
According to her, the group is managing its subcontracting costs and awards long-term contracts so that the matching principle applies to their accounts.
She added that there are terms in their contracts that allow UEM Edgenta to renegotiate prices with customers, even before the expiration of the contract.
UEM Edgenta’s net profit in the second quarter ended June 30, 2022 (2QFY22) surged 77.14% to RM10.86 million, from RM6.13 million in 2QFY21. Quarterly revenue grew 16.54% to RM627.68 million from RM538.6 million.
For 1HFY22, UEM Edgenta’s net profit rose 58% to RM20.27 million from RM12.83 million as revenue climbed 14.16% to RM1.17 billion from RM1.02 billion.
“Our outlook is positive. I think the recovery from the pandemic is clear to see with our topline growth, both in 2QFY22 as well as the 1HFY22,” Syahrunizam said, adding that UEM Edgenta is committed to provide dividend with a 50% to 80% payout ratio based on profit after tax and non-controlling interests (PATANCI).
Syahrunizam said UEM Edgenta will focus on growing its top line to continue to build on innovation and technology.
“If you look at the (contract) quality of the top line, a lot of it is coming from overseas. We want to earn a little bit more foreign income in terms of countries like Singapore, Taiwan and push for more contracts in those countries, as well as in the Middle East.
“And hopefully we can continue to innovate. Because it is very hard to innovate in a market where margin compression and high costs persist. So I think the idea is for large multinational companies like us, we have to continue to grow where we can find quality contracts,” he said.
The company’s current orderbook stands at RM10.5 billion. It said that international markets and technology-enabled contracts continue to lead new contract wins in 1HFY22, accounting for about 70% of these contracts.
For its healthcare division, Chua highlighted that UEM Edgenta will be focusing on a “replacement through maintenance” (RTM) business for 2HFY22 in order to cover the Covid-19 revenue loss as the country transitions into the endemic phase.
Chua said revenue in the division was previously supported by providing digital trackers (e-bracelet) and field hybrid ICU facilities for the Ministry of Health (MOH).
“We have the RTM (now) which continues to be a main feature of our relationship with MOH in replacing equipment. So I think the focus is on value creation for some of the older hospitals and older equipment,” Syahrunizam added.
On Friday, UEM Edgenta’s share price closed one sen or 0.77% higher at RM1.31, valuing the group at RM1.09 billion.