UMediC Group Bhd (UMC) is projected to see improved earnings in the financial year 2027 (FY27), primarily driven by its distribution division, despite near-term challenges from rising plastic input costs. Analysts have highlighted the ongoing volatility in raw material expenses, linked in part to geopolitical tensions affecting oil prices, as a key factor influencing the company’s short-term performance.
According to research from Hong Leong Investment Bank (HLIB), elevated Brent crude oil prices, anticipated to range between US$95 and US$100 per barrel in the first half of FY27, are expected to put upward pressure on plastic input costs for UMC. This situation could constrain the profitability of UMC’s manufacturing segment in the near term.
HLIB noted that UMC’s core net profit declined by 4.5% year-to-date, primarily due to lower profitability in the manufacturing division. The gross profit margin for this division dropped sharply to 6%, compared to 23% in the previous period. This contraction was attributed to adverse foreign exchange fluctuations in the second quarter of FY26 and an increase in plastic input costs starting from the third quarter of FY26.
Nevertheless, the manufacturing division saw a notable quarter-on-quarter increase in revenue, propelled by strong demand for respiratory-related products and the company’s ability to raise selling prices to partially offset the higher input costs.
In a separate analysis, MBSB Research highlighted UMC’s strategic moves to strengthen its manufacturing capabilities. The company is investing in a three-acre industrial land acquisition, expanding its cleanroom facilities, and integrating advanced automation technologies. These efforts aim to address growing demand both domestically and internationally across UMC’s product range.
Moreover, Philip Capital Research emphasized that UMC’s Plant 3, expected to be completed by 2029, will enhance the company’s production capacity. This expansion is viewed as critical to supporting the group’s sustained growth ambitions in the longer term.
Overall, while short-term headwinds from input cost inflation and currency volatility pose challenges, UMC’s expansion initiatives and distribution-led growth are anticipated to underpin improved earnings performance in FY27.