In a research note, Phillip Capital stated that UMC’s monthly production capacity currently stands at approximately 420,000 units, marking a 40% increase from the previous 300,000 units.

It noted the production capacity is expected to increase to 600,000 units by December 2024, effectively doubling its previous capacity.

The expanded space enables additional capacity expansion through the installation of more manufacturing lines.

“We anticipate the integrated healthcare supply chain company’s second half of financial year 2024 (H2 FY2024) results to be stronger, driven by expanded manufacturing capacity and improvements in marketing and distribution segments.

“We reiterate our ‘buy’ rating and maintain our target price at RM1.08, based on an unchanged 25-time price-to-earnings multiple on FY2025 earnings per share,” it added.

The research firm said it believes that the anticipated strong earnings, resulting from the inauguration of the new factory and the launch of the care centre business, will serve as the next catalyst for a rerating.

“The transfer of listing to the Main Market, slated for completion by June 2024, should provide near-term share price support.

“Downside risks to our assessment include a potential slowdown in medical equipment demand, operational disruptions, and licence loss,” it noted.

As at 2.15pm, UMC’s share price was unchanged at 71 sen, giving it a market capitalisation of RM266 million.