Summary

• Optimax Holdings Bhd’s (Optimax) 4Q21 core net profit jumped 71.5% YoY to RM3.6m, bringing a significant surge of 89.8% to RM12.2m in FY21 (FY20: RM6.4m). Meanwhile, an interim dividend of 1.90 sen per share, payable on 26th March 2022 was declared. The results came in above our expectations, amounting to 109.9% of our full year forecast at RM11.1m and 101.7% of consensus forecast at RM12.0m. Key deviations was due to the better-than-expected top line contribution from the eye specialists services.

• YoY, Optimax’s net profit soared 71.5% on the back of (i) gradual recovery in the number of cataract and refractive surgeries conducted amid the National Recovery Plan (NRP), (ii) revenue stream from booster shots under the national vaccination programme (PICK) and MyMedic@Wilayah, and (iii) better control of operating costs (mainly staff costs).

• QoQ, the group’s core net profit fell 33.3% to RM3.6m, mainly due to the lower revenue contribution from the vaccination programmes, as the programmes only involved one dose per adult from October onwards vs. two doses per adult from July-August 2021. Nevertheless, downside was cushion by the increased revenue from the eye specialist services arising from easing of restriction under NRP.

• We believe there will be spillover effect on Optimax’s revenue from PICK and MyMedic@Wilayah through the administration of booster jabs and the participation in PICKids upon approval from the MoH. Nevertheless, we are expecting a lower contribution from the vaccination programmes as the vaccination rate in Malaysia hit 97.5% and 78.8% for adults and total population, respectively.

• For Optimax’s ACC network expansion plan, the new ACC located in Bahau, Negeri Sembilan is currently under renovation and is expected to operate starting from 2Q22. Besides, the group is setting up a satellite clinic in Johor which is targeted to commence its operation starting from end of 1Q22.

• With some branches seeing gradual improvement of the performances back to the pre-Covid-19 level since 4Q22, we are positive on the operating environment moving forward as more states entered into phase 4 of NRP.

Valuation & Recommendation

• Given the reported earnings came in above our expectations, we raised our earnings forecast by 5.0% to RM12.7m for FY22f to account for the higher number of patients for cataract and refractive surgeries amid the country’s transitioning back to normalcy, as well as the potential revenue stream from PICKids. Meanwhile, we project the core earnings for FY23f at RM14.0m.

• We maintained our BUY recommendation on Optimax with a higher target price of RM1.88 (from RM1.80) 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 4.7 sen.

• Risks to our recommendation include the recent resurgence of Covid-19 cases due to the Omicron variant which has driven the R-naught to 1.13 as of 24th February 2022. Any reimposition of movement restrictions may result in surgeries postponement and delay in the new ACC commencement

Source: Mplus Research - 25 Feb 2022