Optimax Holdings Bhd (OPTIMAX”) is making its debut on the ACE Market today. It is one of the largest eye specialist services providers in Malaysia, with a track record of 25 years and operating a network of 13 specialist centres. Recommend BUY with a target price of RM0.45 based on 14x PER FY21 as per the valuation of regional industry players.

Since the commencement of the first specialist centre in Taman Tun Dr Ismail, Kuala Lumpur in 1995, the group expanded its brand of “OPTIMAX” to a chain of 13 eye specialist centres in Malaysia, including one specialist hospital, 11 ambulatory care centres (“ACC”) and one specialist clinic. OPTIMAX provides one-stop eye specialist services, focusing on refractive surgery (laser vision correction and implant vision correction) and treatment of eye diseases and disorders (cataract surgery) complemented by consultation dispensary services as well as oculoplastic surgery.

The group is supported by a dedicated team of 18 eye surgeons of which are stakeholders in the respective centre, reinforcing their commitment to group’s vision. Meanwhile, the professional team has a workforce of 33 optometrists and 30 other clinical nurses. Number of surgeries performed by OPTIMAX has been growing at a CAGR of 22% over the past 3 years and we continue to see growing demand mainly driven by aging population, prevalence of lifestyles diseases leading to eye disorders and increase in healthcare tourism.In line with the ongoing expansion plan of ACC in the central region, OPTIMAX has recently upgraded its specialist clinic in Klang.

RM5.4m of the proceeds is allocated to convert the specialist clinic in Seremban to ACC with expectation to start operation by 4Q 2020. RM5.0m will be utilized to purchase new operation equipment and tools for existing specialist centres. As part of the asset investment strategy, the group is looking to adopt tenancy agreements with minimum period of 3 years with option to extend thus reducing the capital investment required. A total of RM7m will be used for repayment of borrowings and working capital with RM3.5m allocated each.

In terms of financials, the group recorded a steady growth in profitability with a 3-year CAGR of 28% and 41% in revenue and net profit respectively. Post listing, gearing ratio will improve from 0.83x to 0.39x. Presently, the group does not have any fixed dividend policy. With the expansion plans in place and positive outlook for the industry, we expect revenue and earnings growth trajectory to continue going forward.

Source: Rakuten Research - 18 Aug 2020