Hong Leong Investment Bank Bhd (HLIB) has maintained its HOLD call on UMediC Group Bhd with a higher target price of RM0.32, up from RM0.30, saying analysts have raised earnings forecasts following a tax-driven beat in 9MFY26 results, with consensus estimates remaining largely within expectations.
HLIB said UMediC reported 9MFY26 core profit after tax and minority interest of RM5.6 million, up 3.1% year-on-year, coming in above house estimates but within consensus expectations, with the positive surprise mainly driven by a lower-than-expected effective tax rate.
The research house noted that 3QFY26 core PATMI came in at RM1.8 million, representing a 16.9% quarter-on-quarter decline but a 1.2% year-on-year increase, bringing nine-month performance to RM5.6 million. Revenue for the period rose 10.3%, supported by stronger performance in the Distribution division while Manufacturing remained under pressure.
HLIB said Distribution revenue grew on higher demand for medical devices and consumables from both public and private healthcare providers, while Manufacturing was affected by weaker demand for respiratory products alongside higher plastic input costs and currency volatility. Profitability in the Manufacturing segment was also impacted by a weaker US dollar against the ringgit and margin compression.
The analyst noted that margin pressure in Manufacturing was the main drag on overall earnings despite stronger topline growth, with segment performance affected by foreign exchange swings and input cost fluctuations.
Looking ahead, HLIB expects a sequential recovery in the Manufacturing division in 4QFY26, supported by easing plastic input costs as oil prices moderate and a softer ringgit against the US dollar. Distribution is expected to remain broadly stable.
Following the results, HLIB raised its FY26 to FY28 earnings forecasts by between 7.1% and 8.5%, primarily reflecting a lower effective tax rate assumption, and reiterated its Hold rating while lifting the target price to RM0.32 based on an unchanged valuation framework.
As of 11.23 am, the share’s price dropped 3.28% to RM0.295.
