Plantations outfit TDM rides on healthcare biz

Smallish plantations and healthcare group TDM Bhd saw its share price close at its 3-month high on Oct 29. The surge could be due to positive market sentiment and rising valuation among healthcare-related businesses.

This was especially after the RM5.7 billion disposal of Ramsay Sime Darby Health Care Sdn Bhd (RSDH) to Columbia Asia Healthcare Sdn Bhd. The RSDH-Columbia Asia deal has established a new benchmark for the valuation of private hospital operators in Malaysia.

As such, attention has been turned towards similar players such as TDM. TDM has detailed its Vision 2027 strategic business plan, which includes a target profit after tax (PAT) of RM32 million. This plan aims for a PAT margin of 4% and envisions an expanded bed capacity of 880 across its hospitals. These will be achieved by handling 84,028 inpatients and 652,740 outpatients by 2027, the report stated.

Recently, the company announced plans to raise up to RM1.5 billion via a sukuk wakalah programme to fund the company's borrowings, capital expenditure, investments, etc. TDM, in which Terengganu Inc Sdn Bhd owns a nearly 60% stake, said the Islamic medium-term notes (IMTN) programme will have a tenure of 30 years from its first issuance date.

The programme also aims to optimise TDM’s financial structure, including refinancing existing borrowings, as well as meet operational capital needs to ensure the smooth running of day-to-day operations and maintain efficiency throughout its businesses.

TDM currently manages 13 oil palm estates covering 28,531 hectares, along with two palm oil mills, two bio-organic fertiliser plants, and two biogas plants, all in Terengganu. It also operates five specialist hospitals under Kumpulan Medic Iman Sdn Bhd (KMI Healthcare) in Kuala Terengganu, Kuantan, Taman Desa, Kelana Jaya and Tawau.

TDM has been in the red for two consecutive quarters. It managed to narrow its net loss to RM126,000 in the second quarter ended June 30, 2024 (2QFY2024) from RM19.62 million a year ago.

The improvement was mainly due to higher revenue from its plantation and healthcare divisions. Revenue rose 19.7% to RM154.67 million versus RM129.26 million a year ago.

TDM may not be a darling in the plantations sector but it has healthcare business, which should be its growth catalyst, keeping its share price higher in the long run.