Summary

• Within expectations. OPTIMAX’s core net profit came in at RM3.8m (+25.3% QoQ, - 16.6% YoY), bringing the 6MFY23 core net profit to RM6.9m (-4.2% YoY). Despite the results only accounting to 44% and 38% of ours and consensus estimates, respectively, we deemed it is within our expectations as 1H is likely to be weaker due to lesser business days coupled with festive season, which may result in lower surgeries done.

• QoQ. Revenue grew 6.9% to RM27.9m, while the core net profit rose 25.3% mainly due to (i) 2Q23 has more business days (Jan-2023 is CNY period) and (ii) people tend to defer their surgeries until after festive period. Despite some ad-hoc public holidays were declared by the government and festive season in April, the growth momentum gradually normalised in May-Jun 2023.

• YoY/YTD. As compared to 2Q22, the core net profit dropped 16.6% mainly due to (i) increased in operating cost (additional staffs hired in advance for the upcoming expansion of new ambulatory care centres and satellite clinics/centres at the new location), (ii) increase in depreciation expenses and (iii) pre-operation costs (consultancy and professional costs) were incurred at the Cambodia ambulatory care centre.

• Outlook. We are cautiously optimistic on OPTIMAX’s 2H outlook driven by the increase in demand and awareness from both the local and foreign patients that are more health conscious. Also, the regional expansion into Cambodia may provide potential valuable opportunities within the SEA region. Meanwhile, the recent announcement on OPTIMAX securing license to offer plastic surgery and aesthetic services will be a boon for overall revenue and earnings beyond FY23.

Valuation & Recommendation

• Although OPTIMAX core net profit came in within expectation and the outlook remains optimistic, we are ceasing the coverage due to reallocation of internal resources. Our last recommendation on OPTIMAX was BUY with a fair value of RM1.15, which was derived by assigning a target P/E of 40.0x to FY23f EPS of 2.9 sen.

Source: Mplus Research - 25 Aug 2023