KUALA LUMPUR (Dec 19): MARC Ratings has upgraded UEM Edgenta Bhd’s (KL:EDGENTA) Islamic Medium-Term Notes (IMTN) under its RM1 billion Sukuk Murabahah Programme to AAIS from AA-IS, citing the company’s cost management which contributed to enhanced risk profile.

In a statement commenting on the upgrade, UEM Edgenta said MARC’s rating upgrade emphasised UEM Edgenta’s ability to generate consistent cash flows, supported by its diversified revenue streams and long-term contracts.

“The rating agency also acknowledged prudent financial management, which has bolstered UEM Edgenta’s liquidity position and debt servicing capacity,” the statement read.

UEM Edgenta said its infrastructure services arm, Edgenta PROPEL Bhd, benefits from a long-term maintenance contract with Projek Lebuhraya Usahasama Berhad (PLUS), ensuring a stable income stream through 2038.

Additionally, the company’s acquisition of a 60% equity stake in UAE-based Kaizen Group in February 2024 has bolstered its property management portfolio.

“For the first nine months of 2024, newly secured contracts continued to grow, reaching RM2.3 billion (2023: RM2 billion), with healthcare solutions contributing 80%.

“This includes RM900 million worth of contracts for Healthcare Support Services in Singapore, spanning a period of five years,” UEM Edgenta said.

The company’s borrowings stood at RM475 million for the first nine months ending Sept 30, while cash reserves totalled RM494 million, placing it in a net cash position. Operating margins have remained steady at approximately 3%.

Looking forward, UEM Edgenta is implementing initiatives to improve profitability by streamlining operations and leveraging technology to boost efficiency.

These measures are expected to mitigate the impact of Malaysia’s upcoming minimum wage increase from RM1,500 to RM1,700, effective February 2025.

In the nine months ended Sept 30 (9MFY2024), UEM Edgenta revenue rose 7.6% to RM2.23 billion from RM2.07 billion. Net profit rose 14.25% to RM32.56 million or 3.91 sen per share from RM28.5 million or 3.43 sen per share.

Shares of UEM Edgenta settled up 1.5 sen or 1.82% to 84 sen, valuing it at RM694.3 million. The counter is down 15% this year.