Maintain BUY

Optimax’s 1H23 PATAMI was only 38% of our full-year estimate with the marginal miss (<MYR1m net profit) due to GP shortfall. We maintain our earnings estimates, supported by healthy demand for eye healthcare and future expansion, ie. new satellite clinics and ACCs. BUY maintained with an unchanged DCF-derived TP of MYR0.86 (ke: 10.5%, LTG: 3%).

Slight miss on GP shortfall

2Q23 net profit of MYR3.8m (-17% YoY, +25% QoQ) lifted 1H23 net profit to MYR6.9m (-4% YoY). While revenue was in-line (1H at 45% of our FY23E), gross profit (GP) margin, at 38.6%, was slightly short of our 39.5% for FY23E. GP was affected by new staff count hired in advance of its new satellite clinics and ambulatory care centres (ACC) opening, for training purposes. Positively, May/Jun 2023’s revenue momentum have been gradually rising after being affected in April, due to the multiple public holidays; 2Q23 revenue rose 7% QoQ.

No change to our forecasts

We maintain FY23E PATAMI forecast expecting a catch-up in 2H23. Apart from the opening of new satellite clinics and ACCs in 3Q/4Q23, upgrading works at its Penang and Ipoh operating theater rooms which lead to a 2- week closure in 2Q23, have been completed. Operating costs should also normalise once the new satellite clinics and ACCs start operations in 3Q/4Q23. Over the medium term, we continue to project 10.6% PATAMI CAGR (FY23-FY25E) supported by its expansion plans.

Remains optimistic on outlook

Optimax remains cautiously optimistic on favourable operating prospects for FY23. The group will continue to optimize on its operating costs and seek strategic locations across Malaysia to set up more satellite clinics and ACCs to sustain growth. It will also continue to look for opportunities within the SEA region for overseas expansion.

Source: Maybank Research - 25 Aug 2023