Optimax Holdings (Optimax) recorded a marginal 1.4% YoY decline in net profit to RM3.8m in 2QFY24, mainly due to higher operating expenses on expansion of new ambulatory care centres (ACCs). Excluding non-operating items, Optimax’s core net profit maintained at RM3.8m (-1.1% YoY). The results were in line with our expectations at 50% but fell short of the street’s estimates at 43% of full year forecasts. Optimax’s 2QFY24 revenue rose by 15% YoY to RM32m, driven by ongoing promotional activities and a higher number of surgeries after the Chinese New Year festival. Additionally, Cambodia generated its maiden revenue contribution to the Group. Although the contribution was relatively small, we are optimistic that the Group will be able to expand its customer base through sustained marketing efforts. We remain our FY24-26F earnings forecasts and reiterate our Outperform call on Optimax, with an unchanged TP of RM0.83, based on a 27x PER applied to FY25F EPS of 3.1 sen.

• Revenue. Optimax's revenue rose 15% YoY to RM32m in 2QFY24, primarily driven by effective marketing initiatives, including ongoing online promotions and contributions from newly established satellite clinics, coupled with a higher number of surgeries after the Chinese New Year festival. Optimax has started to recognize revenue from its operations in Cambodia with RM0.335m recorded in 2QFY24, contributing 1% to the total revenue.

• Net profit. Optimax recorded a marginal 1.1% YoY decline in core net profit to RM3.8m in 2QFY24, mainly due to a higher operating cost from the early hiring of additional staff for upcoming new ACCs at Atria Mall and Kota Kinabalu, along with pre-operating expenses at its Cambodia ACCs. Consequently, PBT margin decreased to 18.3% in 2QFY24 from 19.7% in 2QFY23. We anticipate the operating costs to normalize in 2HFY24 once the new facilities commence operations in September.

• Outlook. We remain optimistic on Optimax's prospects, as the Group is wellpositioned to capitalize on growth opportunities by optimizing operational costs and strategically expanding its network with new ambulatory care centers (ACCs) across Malaysia. Optimax's dedication in advancing technologies, such as PRESBYOND for presbyopia, further strengthens our positive outlook for the Group. We are positive on its marketing effort through expansion of pediatric eye care services to meet the increasing demand for early intervention in children's eye health.

Source: PublicInvest Research - 29 Aug 2024