PETALING JAYA: Rakuten Trade Sdn Bhd has placed a “buy” call on medical device maker UMediC Group Bhd with a higher target price (TP) of 90 sen from 76 sen.

In a report, the research house said the fast growing distributor of medical equipment and manufacturer of medical consumables is backed by solid prospective earnings growth over the next two years.

“As the government has allocated RM766mil for the procurement of medicines in health ministry hospitals, UMediC is witnessing notable potential in tender opportunities for its marketing and distribution (M&D) segment that offers an attractive gross profit (GP) margin of 35% to 40%,” it said.

Rakuten Trade added that UMediC is expanding into laboratory equipment and laboratory consumables via the acquisition of Patho Solutions (M) Sdn Bhd, which will allow the company to cover four out of five main categories within the medical industry.