Metro Healthcare Berhad (METRO: 0329) will debut on Bursa Ace Market today. METRO is primarily engaged in providing Obstetrics and Gynaecology (O&G) healthcare services, specializes in fertility treatments. Additionally, it also provides Assisted Reproductive Technology (ART) procedures, such as IVF and other fertility-related services for both men and women. With new facilities in the pipeline, we project METRO to register net earnings of RM9.9m, RM11.0m, and RM12.8m for FY24-FY26. We recommend a BUY with a fair value (FV) of RM0.29, based on a 26x PER (peers average) over FY25 EPS.

METRO operates an extensive network of healthcare facilities across Peninsular Malaysia, offering specialized services in O&G, fertility, and paediatrics. With its headquarters in Klang, METRO manages 2 hospitals, 6 fertility centres in key locations, and multiple outpatient clinics, supported by a diagnostic centre in Klang, enabling it to meet rising healthcare demands.

As part of its expansion plans, METRO is negotiating to acquire a maternity hospital in Banting. Expected to cost RM17m, the facility will include an administrative building, outpatient clinic, treatment rooms, and wards hence supporting METRO’s broader O&G services across Malaysia.

METRO aims to continue expanding its reach and improving service quality. As such, a new ambulatory care centre for IVF in Kota Bharu, Kelantan, is expected to open in 1QCY25. Portion of the IPO proceeds are for infrastructure enhancement, operational sustainability, and growth initiatives to strengthen its healthcare network and improve patient experience.

The demand for fertility and O&G services in Malaysia has grown, partly due to delayed family planning and increased awareness of assisted reproductive technology. The healthcare sector in Malaysia is expected to benefit from rising healthcare expenditure, driven by both government support and private investment. This trend is likely to favour METRO’s expansion plans thus positioning the group as a leading provider of specialised fertility services in the country.

METRO has low financial leverage, with net gearing under 0.1x. Following the IPO, 19% of proceeds will cover working capital, and with expected earnings improvements in FY24, the company is poised to achieve a net cash position.

Source: Rakuten Research - 15 Nov 2024

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