Faber

Sources say there are three concessionaires, including Faber Medi-Serve, Pantai Medivest and Radicare, were asked to submit a request for proposal (RFP) for renewal of their concessions.

There have been concerns that the concessions, which expire on Oct 28 2011, would not be renewed. However, based on Pharmaniaga’s experience in 2010, the concession may only be renewed for 10 years, rather than our assumption of 15 years.

This may however, be partly mitigated by the likelihood that the concessionaires may be able to charge higher service fees for more technical services such as maintenance of diagnostic equipment, although this could be offset by lower fees for more general cleaning and laundry services.

Speculation of Faber losing Sabah and Sarawak service areas has resurfaced. Assuming that new parties are brought in as 49% JV partners for the two states, and Faber continues to do the work as a subcontractor.

The risks include shorter renewal period; and 2) risk of losing some Sabah/Sarawak earnings