Renal dialysis will be Adventa’s flagship business main contributor

PETALING JAYA (Feb 24, 2014): Adventa Bhd, which was lifted off Practice Note (PN) 17 classification by Bursa Malaysia Securities last Wednesday, expects to double revenue for the financial year ending Oct 31, 2015 (FY15) with the launch of a new business segment – the home renal dialysis business.
In FY13 the group posted a net profit of RM82 million against RM27 million in revenue. The jump in profit was due to the gain in disposal of its medical glove business.
Its CEO Low Chin Guan told SunBiz the group is launching its dialysis business in the third quarter of FY14, which will be its main focus this year.
Adventa is involved in the distribution of hospital supplies through subsidiary Sun Healthcare Sdn Bhd, sterilisation of medical devices via Electron Beam Sdn Bhd and home renal dialysis services through Lucenxia (M) Sdn Bhd.
Currently, about 60% of the group's revenue comes from Sun Healthcare, while its sterilisation business contributes the remainder.
"What is interesting is our new dialysis business will be the flagship business of the group. In FY15, it (dialysis) should already be the (main) contributor, as the business has big potential in the country and in the region, " Low said in an interview.
"We' re starting it in Malaysia first for the next two years, then moving on to regional countries like Thailand, Singapore, Hong Kong and Vietnam," he added, explaining that the group has a presence in these countries via its sterilisation business.
Low said the scope for Lucenxia locally and regionally is immense, considering its first mover advantage.
It is understood that in Malaysia alone, there are 30,000 individuals who need dialysis daily and the process is done in dialysis centres or hospitals. Each patient spends between RM30,000 and RM40,000 a year.
"The dialysis business, together with consumables, is (worth) close to RM900 million a year. If we are able to roll out our programme correctly, we would be able to get a significant part of (the business)," Low said.
Adventa plans to introduce a cost-effective and comprehensive dialysis package to the public and private sectors where equipment, supplies, nursing care and outcome monitoring are all packaged into one.
Low said such programmes will cost about the same as what each patient spends yearly (RM30,000 to RM40,000), minus additional costs such as travelling expenses.
"Patients should see real savings compared with what they have today in terms of indirect costs and traveling, which are not reflected. These losses are more than what they are spending now on medical fees," said Low.
Adventa fell into PN17 status after the disposal of its major medical glove business. It was classified as a PN17 company on Jan 7, 2013.
"We're not in any way restructuring the company or moving into something different, like real estate. Our existing businesses are being rebuilt with greater emphasis and our home dialysis business is coming on stream."
Its share price closed 13.33% higher at RM1.19 last Friday, which Low said is reflective of the group's potential.
"Going forward, we think there is lot of opportunity for revenue and profit growth. It is a good chance for our investors to continue to invest in Adventa.
"We've divested the traditional manufacturing business and moved into more value-added services in the medical industry. In manufacturing, we are constrained to one or two products whereas in medical services, we are open to many," he said.