Summary

• Optimax Holdings Bhd’s (Optimax) 3Q21 core net profit soared 84.6% YoY to RM5.3m, bringing a significant 98.5% surge in 9M21 net profit as compared to 9M20. An interim dividend of 1.90 sen per share, payable on 24th December 2021 was declared. The results came in above expectations, amounting to 119.2% of our previous full year forecasts of RM7.3m. Key deviation was due to higher-than-expected revenue contributed from the provision of vaccination services as well as higher margin stemmed from a better control of operating costs.

• YoY, Optimax’s net profit jumped 84.6% on the back of (i) gradual recovery in the number of patients for cataract and refractive surgeries amid the NRP, including patients who have postponed their treatment during FMCO in June 2021, (ii) new revenue stream derived from the provision of vaccination services via national vaccination programme (PICK) and MyMedic@Wilayah, (iii) effective marketing effort, and (iv) better control of operating costs after encountering multiple lockdown which increased the group’s margin.

• QoQ, Optimax’s net profit rocketed 162.7% to RM5.3m, primarily due to higher revenue generated amid the easing of certain restrictions under the NRP as compared to previous CMCO, MCO3.0, and FMCO in April, May and June 2021 respectively. Besides, the PICK and MyMedic@Wilayah participated by Optimax has been rapidly rolled out throughout the country in the current financial quarter.

• We believe the new revenue stream from PICK and MyMedic@Wilayah will contribute positively to the group, especially after the rollout of Covid-19 booster vaccination shots, but the contribution may be lower than that in 3Q21 as the booster Covid-19 doses was not mandatory.

• Being committed to its ACC network expansion plan, Optimax had identified a potential ACC location at Bahau, Negeri Sembilan and expected the renovation works to be completed by 1Q22. Besides, the group continues its effort in extending its geographical coverage by looking out for potential expansion towards East Coast and Sabah, as well as setting up satellite clinics to reach remote area.

• Moving forward, we expect Optimax’s business to return to normalcy while the number of patients should remain stable as adult vaccination rate stood at 95.8%.

Valuation & Recommendation

• Given the reported earnings came in above our expectations, we raised our earnings forecast by 52.1% and 10.0% to RM11.1m and RM12.1m respectively for FY21f and FY22f to account for the new revenue stream contributed from PICK and MyMedic@Wilayah, more surgeries conducted amid easing of restrictions as well as the higher margin arising from a better control of operating costs.

• We maintained our BUY recommendation on Optimax with a higher target price of RM1.80 (from RM1.63) after rolling over our valuation metrics to FY22f. Our target price is based on the assigned target PER of 40.0x to our FY22f EPS of 4.5 sen.

• Risks to our recommendation include the potential resurgence of Covid-19 cases in Malaysia given the R-naught stood at 1.00 as of 23rd November 2021. Any reimposition of movement restrictions may result in surgeries postponement and eventually reduce the group’s margin.

Source: Mplus Research - 25 Nov 2021