Faber hopes to get extension for hospital support services concession soon (1368)

KUALA LUMPUR: Faber Group Bhd is hoping that its hospital support services (HSS) contract with the Government will be resolved after Advance Pact Sdn Bhd had inked a 21-year HSS agreement for a new hospital in Kuantan last week.

Two company officials in Faber said the company was clueless on this matter and said that it would be “very helpful” if an official word on this was conveyed to them to aid in their overall planning and resource allocation purposes.

However, StarBiz has learnt from sources that recently certain top ranking Health Ministry officials had paid a visit to Faber's plant in Bukit Beruntung and had personally conveyed their assurance that the renewal of the HSS contract would be granted to Faber “eventually.”

“They also told us (Faber) to increase our capacity in anticipation of further expected demand due to growing healthcare in the country. But we need to know the timeframe of such matters and an official word from them will be good you know. All this uncertainty does not bode very well for our business development and our capital allocation; all these needs advanced planning,” a source said.

The Government had reportedly been scheduled to announce a definitive HSS concession late last year but the announcement did not materialise due to reasons unknown.

The official HSS concession for Faber had lapsed back in April this year after the Government extended the agreement for an interim period of six months.

Thereafter, the Government had instead issued another letter stating that Faber would continue to service the Government with the existing concession terms and conditions until a new agreement was signed with the Health Ministry.

Meanwhile, the company which is a 34%-owned associate of UEM Group Bhd had cast its net wider by engaging more in property development to rely less on the healthcare sector. A company source said the property business segment was expected to contribute 40% of its profits before minority interest for Faber's financial year ending Dec 31.

“Yes, you can say that we are starting to look away from our traditional sources of revenue. We are also moving to possibly secure more HSS deals with other private hospitals,” the source said.

The company has two major upmarket property projects which are expected to be completed by the end of this year the Armada Villa in Taman Danau Desa Kuala Lumpur and the Areca Residence in Kepong KL with total gross development values of RM430mil.

Faber had reported its first quarter year-on-year net profit surged 16.5% to RM16.5mil on the back of revenues declining slightly to RM184mil from RM198mil in the same quarter a year ago.