• Optimax expects continued growth in tourist contributions in the coming years, from less than 2% in 2022–23 to c.10% currently

• The company will focus on ramping up its utilisation rate with less aggressive new outlet expansion plans in 2025; Cambodia is seeing strong demand with a plan to expand an additional outlet in Vietnam

• Maintain BUY rating with an unchanged target price of RM0.80

Medical tourism to drive stronger earnings momentum

We came away from our meeting with Optimax with greater assurance of its growth trajectory. Management emphasized expanding beyond Malaysia and tapping into the growing medical tourism sector. This initiative shows positive results, with contributions from medical tourists accounting for 10% of total revenue, an increase from <2% in 2022– 23. Optimax continues to see strong traction in surgery volumes, expected to drive sequential QoQ revenue growth. The company currently operates 21 operation theatres (OTs), and running at 65% utilization.

Setting its sight on Vietnam after Cambodia

In 2H24, Optimax launched 2 Ambulatory Care Centres (ACCs) in Kota Kinabalu and Atria and a satellite clinic in Bukit Mertajam. The company will slow its pace of expansion in 2025 as it focuses on increasing patient volume and improving outlet utilisation rates across its network of 16 ACCs, eight satellite clinics, and a specialist hospital. The new Cambodia outlet is performing well, particularly in refractive surgeries, operating at full capacity whenever doctors traveling from Malaysia are available. Seeing strong interest and market potential, Optimax plans to open an additional outlet by end25. The expansion plan in Malaysia remains on track, with Selgate and Kempas Hospital expected to complete construction by the end of 2025.

Maintain BUY with unchanged TP of RM0.80

We reiterate our BUY rating with an unchanged target price of RM0.80, based on a 25x target PE multiple on 2025E EPS. We find valuation undemanding, with Optimax trading at 19x 2025 PE, at -1SD of its 3-year mean. We continue to like the company for its local niche operator status in the eye-care segment and strong earnings growth prospects driven by its strategic regional expansion. Key downside risks: lower-than-expected consumer spending leading to lower foot traffic in its centres and a shortage of licensed medical practitioners.

Source: Philip Capital Research - 22 Jan 2025