Summary

• Optimax Holdings Bhd’s (OPTIMAX) 3Q22 core net profit fell 31.1% YoY to RM3.7m, but 9M22’s core net profit rose 25.2% to RM10.9m. The results came in slightly above expectations, amounting to 79.3% of our full year forecast of RM13.7m and 77.5% of the consensus forecast at RM14.0m. Key deviations include higher-than expected number of surgeries conducted in 9M22 amid easing of pandemic containment measures. Meanwhile, an interim dividend of 1.2 sen per share, payable on 23rd December 2022 was declared.

• Core net profit declined YoY, primarily attributed to (i) decrease in contribution from Central Malaysia in absence of revenue stream from the national vaccination programme (PICK) and MyMedic@Wilayah which had been rolled out in FY21, and (ii) one-off professional fees paid to consultants for the transfer listing exercise in the current quarter. 9M22 core net profit however improved on the back of higher number of refractive surgeries and cataract surgeries conducted, effective online marketing effort, and better control of operating costs.

• QoQ, core net profit dropped 19.7% despite a higher revenue generated from increased number of surgeries conducted with the easing of restrictions under the NRP. The decline in net profit was mainly due to the one-off professional fees paid to consultants for the transfer listing exercise.

• OPTIMAX’s first satellite clinic in Skudai, Johor, and the new ACC in Bahau, Negeri Sembilan have both commenced operation in 3Q22. We expect the new ACC to have gestation period of less than 1 year, similar to other small ACC. To date, Optimax operates an extensive network of 13 ACC, 1 specialist hospital, and 1 satellite clinics, while eyeing another 5 satellite clinics that are currently undergoing renovation.

• Under the MoU between OPTIMAX and Selgate Healthcare Sdn. Bhd., both parties have agreed to extend the MoU expiring on 17th December 2022 for 24 months. Meanwhile, there is no material development pertaining to the MoU between OPTIMAX with Sena Resources Sdn Bhd (SENA)and Kempas Eye Specialist Hospital Sdn Bhd whereby SENA is to construct an Eye hospital and rent it to OPTIMAX.

• In November 2022, Optimax has transferred from the ACE Market to Main Market of Bursa Malaysia Securities Bhd. The transfer listing should enhance the company’s reputation and credibility, which will improve the liquidity and marketability of Optimax shares.

Valuation & Recommendation

• As the reported earnings came in above our expectations, we upgrade our FY22f and FY23f earnings forecast by 5.1% to RM14.4m and 3.3% to RM14.5m respectively, taking into account the increased number of surgeons. As the relaxed SOP of Covid-19 containment measures have brought some of OPTIMAX’s branches performance back to pre-Covid-19 level, we remained upbeat on the group in view of its expanding ACC network.

• We maintained our BUY recommendation on OPTIMAX with a revised target price of RM1.07 (from RM1.04). The target price is based on the assigned target PER of 40.0x to our revised FY23f EPS of 2.7 sen.

• Risks to our recommendation include the resurgence of Covid-19 infections which may result in postponement of surgeries. Besides, the inflationary pressure amid rising food and energy prices remains as threat to local economy.

Source: Mplus Research - 30 Nov 2022