KUALA LUMPUR: MARC Ratings has affirmed and revised its rating outlook for UEM Edgenta Bhd's Islamic Commercial Papers (ICP) and Islamic Medium-Term Notes (IMTN) under its sukuk murabahah programme of up to RM1.0 billion to positive, on progress made in strengthening its core businesses.
The outstanding sukuk currently stands at RM250.0 million.
"The rating affirmation incorporates UEM Edgenta's well-established track record in providing healthcare support services (HSS) to the healthcare sector, and maintenance services to the infrastructure sector. "The affirmation is underscored by the group's resilient credit profile, characterised by low leverage and a healthy liquidity position," it said.
According to MARC, the outlook revision reflects the continued progress UEM Edgenta has made in strengthening its key businesses that would increase its operating margin and consequently strengthen its financial performance.
The group has steadily expanded its HSS operations in Malaysia to private hospitals in Singapore and Taiwan through its wholly-owned Singapore-based subsidiary UEMS Ltd.
As at end-September 2023, it serves 300 hospitals with contracts worth RM2.3 billion.
The rating agency said the steadily increasing overseas contracts has reduced its dependence on low-margin government contracts to 54 per cent as at end-June, from 82 per cent in 2018.
Notwithstanding this, it also said that the group is exposed to contract termination and renewal risk, although the rating agency views this to be low on the basis of the group's established track record.
With regards to infrastructure services undertaken through wholly-owned Edgenta PROPEL Bhd, UEM Edgenta benefits from a long-term master maintenance services contract worth RM6.3 billion with related company Projek Lebuhraya Usahasama Bhd (PLUS) that provides assured income stream through 2038.
It provides maintenance services for over 3,500km of highways and state roads. It has also secured highway maintenance contracts in Indonesia.
The group is expanding its services to the United Arab Emirates through a 60 per cent equity-stake acquisition in a local property management company, Kaizen Group, for RM55.1 million.
This follows the acquisition of a 60 per cent stake in a local facility management company in the Kingdom of Saudi Arabia.
The expansion signifies the group's strategy to strengthen the division and its Middle East footprint by leveraging on its expertise and track record.
