KUALA LUMPUR (March 3): Offshore crane services provider Handal Energy Bhd (KL:HANDAL) has proposed to venture into the healthcare services through the subleasing of two hospitals in Selangor.

The company has signed a memorandum of agreement (MOA) with Hartanah Azzahrah Sdn Bhd (HASB) which requires Handal to source a buyer for Hospital Islam Az-Zahrah Bangi and Hospital Az-Zahrah Bandar Tun Hussein Onn, for a total indicative consideration of not less than RM69 million.

The two hospital properties comprise a combined 69 hospital beds. The purchase price is set at a minimum of RM1 million per bed, said Handal in a filing with Bursa Malaysia on Monday.

Upon successful acquisition, the buyer will lease the properties to Handal, which will then sublease them to Medi-Circle Sdn Bhd and Pusat Rawatan Islam Az-Zahrah Sdn Bhd to continue operating them as private healthcare facilities.

The sublease period will span 30 years, with an annual rental rate fixed at 8% of the acquisition price. Handal said the structured lease and sublease model is expected to generate stable, recurring income for the company, contributing positively to its future financial performance.

"The entry into this MOA aligns with the group’s strategy to explore the potential in the healthcare sector, which offers stable long-term growth prospects," Handal said in the filing. "In addition, it allows the group to leverage its experience in managing infrastructure and assets while tapping into the increasing demand for private healthcare services in Malaysia."

While the MOA is not expected to have an immediate financial impact, the definitive agreements are expected to be finalised within the next six months.

Handal has been loss making over the last seven consecutive quarters. For the three months ended Dec 31, 2024, the company recorded a net loss of RM1.79 million on the back of revenue of RM2.65 million.

For the six months ended Dec 31, 2024, Handal reported a net loss of RM3.93 million with revenue of RM5.05 million.

Due to a change in the financial year end, the company’s performance for the six-month period ended Dec 31, 2024, is not comparable against any comparative period previously reported.

Revenue was contributed mainly from overhaul maintenance, parts trading, pipeline maintenance, and engineering services maintenance for gas turbines.

Handal's shares closed up 0.5 sen or 9.09% at 6 sen on Monday, valuing the company at RM24.6 million.