Maintain BUY with unchanged DCF-TP of MYR0.86 Optimax’s 1Q23 core net profit of MYR3.1m (+18% YoY, -20% QoQ) was in  line with our expectations, driven by healthy demand for eye healthcare and newly opened satellite clinics and ACCs. We make no change to our  estimates, maintaining our BUY call with a DCF derived TP of MYR0.86  (10.5% ke; 3% LTG).

Higher Earnings From Newly Opened Centres

Optimax’s 1Q23 core net profit of MYR3.1m made up 19%/17% of  our/consensus full-year estimates. We consider this in-line, as we expect earnings to grow further as Optimax continues its expansion efforts this year. The 18% YoY growth in 1Q23 profit was driven by a higher revenue of  MYR26.1m (+12% YoY, -8% QoQ) from higher surgery volumes driven by ongoing marketing efforts, as well as the newly opened Bahau ACC and  Cheras satellite clinic in late-FY22. The 20% QoQ decline in 1Q23 profit is to be expected, as 1Q surgery volumes tend to be lower with patients opting to undergo treatments only after Chinese New Year festivity.

On Track for a Stronger FY23

Optimax announced in the 4Q22 results briefing that it is targeting to open  9 new satellite clinics in FY23, which will contribute to higher surgery volumes and consultation & dispensary revenue; this is in line with our expectations of a 10% YoY growth in FY23E earnings.

Optimistic on Healthy Demand and Expansion Plans

Following positive 1Q23 results, we maintain a positive outlook on Optimax given i) continued favourable demand for its eye specialist services; ii) short-term expansion efforts; and iii) its long-term growth potential. As a  reminder, Optimax’s expansion pipeline includes its MOU with Selgate  Group of Hospitals to open new ACCs, as well as the ongoing construction  of its new hospital in Kempas, Johor (which we anticipate to be  operational by FY25). We maintain our BUY call.

Source: Maybank Research - 29 May 2023