PETALING JAYA: UMediC Group Bhd is expected to post stronger sequential earnings moving forward to be driven by increased capacity at its manufacturing segments and improved marketing and distribution segment, says Phillip Capital Research.

However, the research house has cut the group’s financial year 2025 (FY25) to FY27 earnings forecasts by 8% to 16% to account for slower-than-expected sales from the distribution segment coupled with lower margin expectation.

Similarly, Hong Leong Investment Bank (HLIB) Research also cut its FY25 to FY26 forecasts by 13% and 18% to reflect lower revenue (distribution) and profit before tax margin (manufacturing) assumptions.

For FY25, the it expects UMediC core profit after tax and minority interest growth of about 8% year-on-year, mainly supported by increased production capacity of HydroX prefilled humidifier to 420,000 450ml bottles per month since April 2024, from 300,000 bottles per month previously.This will further expand to 600,000 bottles per month by December 2024, and to 1.1 million bottles per month by the first quarter of 2025.

“For the marketing and distribution segment, we project it to grow steadily at a three-year compounded annual growth rate of 8%, predominantly from higher expenditure on medical and lab devices and consumables from both the public and private sectors,” HLIB Research added.

Meanwhile, the brokerage firm said UMediC’s foray to healthcare services, via UMC Care Centre also underscores its diversification strategy. UMC guided that it will accept patients by the end-2024. Both Phillip Capital Research and HLIB Research have maintained their “buy” calls on the stock.

However, Phillip Capital Research has revised downward UMediC’s target price to 78 sen from 88 sen previously, to reflect the weaker-than-anticipated growth momentum as it rolled over the valuation base year to FY26.