KUALA LUMPUR: UMediC (UMC) Group Bhd is well-positioned to expand its manufacturing capacity because of the high demand for its products. 

Hong Leong Investment Bank (HLIB) Research noted the company's expansion efforts post-completion of its new facility aim to double manufacturing capacity to 600,000 units per month by December 2024. 

"We also see potential for further expansion beyond this expansion initiative, considering the robust demand for our own manufactured products. 

"Its pivot towards healthcare services, as evidenced by the UMC Care Centre, also underscores its diversification strategy," it said in a note. 

It noted that medical equipment tenders for new hospitals and expansion projects have continued to remain robust, alongside the emergence of tenders for routine medical equipment replacements. 

However, some of these tenders are adopting a leasing model, where payment for equipment leasing is staggered as opposed to upfront lump-sum payments upon equipment delivery. 

"This signals the government's initial venture into the leasing model, and if successful, we anticipate a potential increase in similar tenders in the future. 

"This transition could prove advantageous for UMC, as it would necessitate the participation of suppliers with solid financial standing due to the elongated payout period, potentially sidelining smaller competitors." 

UMC has recently diversified into healthcare services with the establishment of the UMC Care Centre, a new venture complementing its core business of medical equipment distribution. 

The care centre will occupy a four -storey shop-lot building spanning 7,427 square feet in Batu Kawan. Approval for the facility's floor plan has been obtained from local authorities, and renovation work is currently in progress, aiming for completion by the end of May. 

Operations are slated to commence in July 2024.

The firm maintained "buy" on the stock with a target price of 91 sen.