UEM Edgenta mulls special dividend after disposal of OIC stake

SUBANG JAYA: UEM Edgenta Bhd is considering a special dividend payout after it received shareholders’ nod for the disposal of its 61.2% stake in asset development and services entity Opus International Consultants Ltd (OIC) to Canada’s WSP Global Inc for NZ$173.8 million (RM528.6 million) cash.
“One of the things that the board is considering is a possible special dividend once we close the transaction,” its managing director and CEO Datuk Azmir Merican told a press conference after the group’s EGM today.
Any special dividend will be announced along with its fourth quarter results in February 2018, after taking into account its full-year performance.
UEM Edgenta, which has a 70% dividend policy, declared an 8 sen interim dividend for the second quarter ended June 30, 2017, higher than the 7 sen paid for FY16.
According to Azmir, proceeds from the disposal will be utilised to repay bank borrowings (RM415.2 million) and for working capital (RM110 million). It is expected to reap an estimated gain of RM292.3 million from the disposal exercise.

Upon completion, the group will be in a net cash position from the current net gearing of 0.25 times.
OIC, which contributed 8% to UEM Edgenta’s net profit in FY16, is involved in the provision of engineering consultancy services and integrated asset management.
The disposal will enable UEM Edgenta to focus on the regional markets of Malaysia, Indonesia, Singapore, Taiwan and the Middle East. OIC’s overseas operations in Canada and Australia have been hard hit.
Azmir said the group is not concerned over the earnings gap as a result of the absence of contribution from OIC, as the resources will be redeployed to develop its core business of infrastructure, healthcare and real estate.
“We’re confident that we can fill the gap within the next couple of years because the gap is not very significant.”
Meanwhile, UEM Edgenta chairman Amir Hamzah Azizan pointed out that the group’s acquisition of UEMS Pte Ltd last year also has helped improve its yield in the healthcare sector. UEMS serves over 60 public and private hospitals and 26,000 beds in Malaysia, Singapore and Taiwan.
“I think for this year and next year, we’ll spend more time on organic growth.”
UEM Edgenta swung to the black registering a net profit of RM27.37 million for the second quarter ended June 30, 2017 against a net loss of RM8.04 million in the previous corresponding period, due to the absence of impairment losses.
This brought its first-half net profit over three times higher to RM54.66 million from RM12.45 million in the same period a year ago.
On a separate note, Azmir declined to comment on earlier news reports on UEM Edgenta’s proposal to maintain all of the PLUS highways on a long-term basis.
UEM Edgenta shares rose 7 sen or 2.7% to RM2.67 today on some 170,100 shares done.