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Monday, November 17, 2014

TDM to double revenue in 2015 with more beds


KUALA LUMPUR: Plantation and healthcare group TDM Bhd (Financial Dashboard), which is 60.7%-controlled by the Terengganu government, is targeting a double-digit growth in revenue for its financial year ending Dec 31, 2015 (FY15), which it believes will be driven by capacity expansion of its hospitals in Pahang, Terengganu and Kuala Lumpur.

“Currently, 70% of our revenue is generated by the plantation business, while healthcare contributes the remaining 30%. Both operations will grow their own revenue base but we will be aggressive in expanding our hospitals to improve our capacity,” chief financial officer (CFO) Amir Mohd Hafiz Amir Khalid told The Edge Financial Daily in an interview.

TDM, via its 90.49%-owned unit Kumpulan Mediiman Sdn Bhd, currently operates four “no-frills” hospitals, namely Kuala Terengganu Specialist Sdn Bhd, TDMC Hospital Sdn Bhd, Kuantan Medical Centre Sdn Bhd and Kelana Jaya Medical Centre Sdn Bhd.

As at end-2013, TDM had 204 beds. It plans to double this to 450 beds by 2016; by 2022, the figure will be upped to 700 beds through the acquisition of a “secondary care” hospital that has 80 to 150 beds.

“We will consider those with a similar ‘no-frills’ business model, where you pay for good care and not for luxury,” said Amir.

TDM’s annual average revenue for its healthcare business has leapt five-fold since 2004 to RM63.2 million from the RM11.9 million recorded in the six years between 1997 and 2003. This, said Amir, was due to a “quiet rehabilitation” since 2004, where it divested low-margin and loss-making subsidiaries — some of which were in the hospitality, travel and poultry industries — while it upped efficiencies.

Before 2007, all TDM hospitals were in the red due to increasing costs and operational inefficiency.

Amir said the turnaround came after the group started offering more affordable medical fees, which were lower by 10% to 25% than as scheduled under the Private Healthcare Facility & Services Act.

On TDM’s previously reported plan to list its healthcare business via Kumpulan Mediiman in 2016, Amir said that has been delayed to 2017 while the group focuses on its expansion plans.

As for its plantation business, it currently manages 44,381ha of oil palm plantations — owned and sub-leased plots — of which 32,459ha are in Malaysia, while the balance of 11,922ha are in Kalimantan, Indonesia.

Amir said TDM expects to double its own estate size, which is currently at 32,000ha to 70,000ha in 2018. By 2022, it hopes that it will hit 100,000ha.

“We are eyeing several locations, including Papua New Guinea, to increase our land bank,” said Amir, adding that the group currently has a land bank of 68,459ha, of which 24,078ha are unplanted.

The group owns two palm oil mills in Terengganu, with a processing capacity of 60 tonnes per hour. TDM expects to commission its first palm oil mill in Indonesia by 2015, and is targeting to construct the second mill there in 2017.

On whether it will diversify into midstream or downstream, Amir said TDM remains committed to the upstream business as it has “the highest profit margin”.

As for the group’s capital expenditure plans, Amir said TDM has allocated between RM1.5 billion and RM1.6 billion for six years to 2020, to fund the operation of its plantation and healthcare business.

“By 2020, we expect some RM1 billion to be utilised for our plantation business, both in the country and in Kalimantan, while some RM300 million to RM400 million will be channelled to fund our hospital operations,” he said.

On long-term growth, Amir said TDM wants to be in the Top 100 listed companies on Bursa Malaysia by 2022, with an expected market capitalisation of RM2 billion. TDM’s market capitalisation stood at RM1.31 billion last Friday, while its stock closed 0.56% lower to 88 sen.

This article first appeared in The Edge Financial Daily, on November 17, 2014.

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