Optimax Holdings (OPTIMAX MK/BUY/RM0.81/Target Price: RM1.10) 1H20: Temporary Glitches By MCO; Good Growth Trajectory Ahead
*What’s New* • *ACC expansion drives organic growth.* Optimax’s expansion plan includes upgrading both Klang and Seremban branches to Ambulatory Care Centre (ACC) in order to carry out cataract and refractive surgical procedures. Management sees the potential annual revenue generation from both ACCs to be closed to RM10m-12m from 2021F onwards (2019: RM1.3m). We gathered that Optimax’s organic growth comes from the growing number of ACC.
• *Earnings recovery in 2H20*. While 1H20 earnings dropped 77% yoy amid COVID-19 impact, management sees surgeries picked up encouragingly with surgeries conducted for the month of June and July have outpaced the average monthly level seen in 2019. Taking cues from management inputs and records in the past, we believe the healthy underlying demand for ophthalmologist services could pave the way for an earnings recovery in 2H20.
• *Good growth prospect with a 24% earnings CAGR for 2019-22F*. This will be underpinned by: a) additional revenue stream from the Seremban and Klang ACC, b) an average 23% revenue growth from both cataract and laser operations, and c) established market presence. Optimax is the key beneficiary of the growing trend of aging and myopic populations.
• *Maintained BUY with a higher target price of RM1.10* in tandem with earnings upgrade (raised 18% and 14% for 2021F-22F earnings). We also ascribed a higher 2021F PE from 20x to 25x. This is based on regional 2016-19 average PEG of 1.5x, and a 30% discount from the implied PE of 36x. Since our initiation with BUY, share price soared up 270% from its IPO price and 13% from our previous TP. That said, we believe the market might not have sufficiently priced in for its scarcity premium given its good value proposition.
From the momentum, it is trending higher with the short term of RM 1 easily breached. Fundamentally a very sound Company with specialised business not easily replicated.
Just sold my lots, because the revenue will be bad when they release the 2020 reports, the number of cataract surgery has gone down by 40% and it is giving discounted prices (RM$2,800) to fight Top Vision and Vista.
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bose00
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Posted by bose00 > 2020-08-19 11:15 | Report Abuse
During MCO , optimax business is impacted too. Will monitor next qtr to decide buy in
Now it’s too expensive. If I got the IPO I would have sold it as well for 100%+ of gain !