UOB Kay Hian Securities (M) Sdn Bhd set a ‘buy’ rating for shares of UEM Edgenta Bhd (UEME) with a projected 67% compound annual growth rate from 2021 to 2023.
In its research note today, the firm said UEME will be a major recipient of growth as a result of the reopening of the economy and the development of the healthcare industry.
“This expectation is supported by its strong contract value of RM12.2 billion, especially from the health services and infrastructure division as well as operational efficiency through the integration of advanced technology.
"The growth of the healthcare industry, the abolition of cross -state travel bans, increased environmental awareness and the launch of infrastructure projects will act as catalysts to continue to support UEME's revenue visibility for the next three to five years," UOB Kay Hian said as reported by Bernama.
The research firm also noted that UEME has positive growth prospects, supported by its parent company, UEM Group, which is owned by Khazanah Nasional.
"This will support the company's dividend payout ratio of 70% which we project will provide between 5% to 7% for 2021 to 2023, consistent with its policy," said the firm.
UOB Kay Hian expects that the high dividend payout will be supported by UEME’s strong net cash position of RM206.2 million and a gross gearing ratio of 0.32 times.
"We maintain the UEME target price at RM2.30 per share," according to the firm.
