• FY23 core net profit of RM12.9m was in line with our/Bloomberg consensus’s forecasts, while FY23 DPS of 1.2 sen was slightly shy of our expectations.

• 4Q23 core profit fell 16.2% yoy, as higher staff costs (from staff hiring in 3Q23 in preparation for opening of new ACCs) more than offset revenue growth.

• We reiterate Add, with an unchanged TP of RM0.84. We think valuations are cheap as it currently trades at 1.0 s.d. below its 3-year mean P/E of 27.0x.

FY23 results in line

• Optimax Holdings reported a FY23 core net profit of RM12.9m, in line at 105%/95% of our/Bloomberg consensus’ estimates. 4Q23 core net profit fell 16.2% yoy (+11.9% qoq) to RM3.2m as higher staff costs and depreciation more than offset revenue growth.

• Optimax declared a 4Q23 interim DPS of 0.6 sen (4Q22: 1.2 sen), bringing FY23 DPS to 1.2 sen, which was below, at 88%/60% of our/Bloomberg consensus’ FY23 DPS estimates. FY23 DPS of 1.2 sen translates into a payout of 50% of its net profit.

Higher revenue growth helped to buffer higher staff costs in 4Q23

• Optimax saw revenue grow by 10.6% yoy in 4Q23. Optimax attributed this to the maiden contribution from its new satellite clinics, as well as effective marketing efforts from ongoing promotions through online platforms. 4Q23 EBITDA margin fell 1.4% pts yoy (+0.4% pt qoq), which was mainly due to higher staff costs yoy as Optimax had hired additional staff in 3Q23 who will need to be trained before their new ambulatory care centres (ACCs) in Atria, Kota Kinabalu and Cambodia start operations in early-FY24F.

Reiterate Add, with RM0.84 TP

• We reiterate Add, with a GGM-based TP of RM0.84. We project a strong rebound in earnings by 10.5%/30.0% in FY24F/FY25F, driven by revenue growth following the opening of new ACCs in Atria, Kota Kinbalu and Cambodia in FY24F, as well as Selgate Hospital and Kempas Hospital in FY25F. The stock has de-rated since the start of 2023 and currently trades at 1.0 s.d. below its 3-year mean P/E of 27.0x since listing in FY20. Re-rating catalyst: stronger-than-expected earnings delivery in FY24-25F. Downside risks: delays in its expansion plans, longer gestation period for its new centres.

Source: CGS-CIMB Research - 28 Feb 2024