KUALA LUMPUR (Aug 29): UEM Edgenta Bhd (KL:EDGENTA), which registered a near 5% drop in first half net profit, expects stronger results in the second half, amid ongoing cost optimisation, growing infrastructure services business and increasing momentum in foreign markets.

“We see an uptrend [in growth] in our foreign markets and we also see benefits from our cost optimisation and growing infrastructure business domestically,” said its managing director cum chief executive officer Syahrunizam Samsudin.

“This will allow us to prove to shareholders that we are on the right track,” he said at a media and analyst briefing on the company's results on Thursday.

The asset management and infrastructure solutions company has also been proactive in managing costs, with a comprehensive optimisation programme that spans procurement savings, opex control and workforce management,  said Syahrunizam, adding that the company has achieved RM91 million in savings so far this year.

UEM Edgenta was aiming to achieve RM100 million in cost savings over five years from FY2021 to FY2025 under its Edgenta of The Future 2025 (EoTF) initiative.

“Our cost optimisation initiatives are bearing fruit…  We are [now] going for EoTF 2.0, we are going to increase our total cost savings over five years to RM150 million," said Syahrunizam.

He added that the infrastructure service segment, which offers expertise on highway network maintenance including pavement works, is anticipated to drive the group’s performance in the second half of FY2024. 

With increasing traffic volumes on Malaysian roads, demand for road maintenance services is on the rise, Syahrunizam said. 

Touching on the contract renewal with the Ministry of Health for the provision of hospital support services to public hospitals, he said negotiation is still ongoing and expects this to conclude by the end of this year.

“It is looking positive,” he said, adding that the contract typically spans a decade and is valued at about RM500 million annually on average. 

Syahrunizam said a total of RM2 billion in new contracts were secured in the first half of the year, matching total new wins in FY2023. More than 90% of these wins came from its international business in Singapore, Taiwan and the Middle East.

UEM Edgenta’s net profit stayed flat at RM12.6 million in the second quarter ended June 30, 2024, from RM12.53 million a year earlier, while revenue expanded 5.6% to RM759.53 million, from RM719.26 million.

For the first half of FY2024, the group’s net profit fell 4.71% year-on-year to RM22.33 million from RM23.43 million, while revenue increased 6.37% to RM1.44 billion, from RM1.35 billion.

It has not paid any dividend so far this year. Previously, it paid a dividend of two sen per share in FY2023, compared with four sen in FY2022 and three sen in FY2021. 

Shares of UEM Edgenta closed up 0.5 sen or 0.7% to 70.5 sen, bringing the group a market capitalisation of RM586 million.  Year to date, the stock has fallen 40%.