Maintain BUY; TP unchanged at MYR0.87

OPTIMAX’s 1H24 core net profit (CNP) of MYR6.8m (-1% YoY) was marginally ahead of our FY24 est. of MYR13.2m. We make no change to our earnings estimates for now, with the upside potential to our forecasts coming from higher delivery of surgery volumes and normalisation of pre-hiring cost. We continue to favour OPTIMAX for its surgery growth potential. Reiterate BUY with an unchanged DCF-TP of MYR0.87 (ke: 10.5%, LTG: 3%).

Higher revenue contribution from ZEISS Smile Pro

2Q24 EBITDA/CNP grew by +30%/+25% QoQ, supported largely by revenue uplift (+14% QoQ) due to higher cataract surgery delivery (+22% QoQ) and higher average revenue per surgery for the refractive segment. YoY, revenue rose +15% as cataract surgery rose +8% YoY. Despite recording lower surgery volumes by -12% both YoY and QoQ, the refractive segment delivered higher revenue due to the higher-bill-size ZEISS Smile Pro treatment. Staff costs grew +1% QoQ due to pre-hiring of medical staffs.

Expect some cost normalisation in 2H

We look forward to pre-hiring staff cost normalization in 2H24 as OPTIMAX’s newly launched ACCs in Cambodia, Taman Melawati, and Atria (PJ) turn operational, which will improve profit margins alongside surgery delivery contribution. OPTIMAX remains consistent in developing its plastic surgery segment as a new revenue source, with its second plastic surgery OT having opened in Atria ACC in July 2024.

Attractive pricing for health tourism packages

OPTIMAX remains positive on health tourism due to its competitive pricing, offering refractive surgery rate that is 2-45% cheaper against other ASEAN players. We maintain our earnings forecasts.

Source: Maybank Research - 30 Aug 2024