Optimax’s 9M24 core net profit of RM10m (+3% YoY) was in line with our and consensus expectations, accounting for 72% and 70% of respective full-year forecasts. 9M24 revenue increased by 13% YoY, led by effective marketing efforts from ongoing promotions and contributions from three newly opened Ambulatory Care Centres (ACCs) in Cambodia, Atria (Neumax and Optimax), and satellite clinics in Taman Melawati. EBITDA margin improved 1ppts YoY to 29% as operating costs normalized with the commencement of the new outlets. Optimax declared a 0.8sen interim dividend per share (DPS) in 3Q24.
Sequential revenue rose 3% QoQ, driven by higher surgery volumes. Despite stronger revenue, core net profit fell by 16% QoQ due to pre-operating costs incurred for opening the two ACCs in Kota Kinabalu and Bukit Mertajam, which received their licenses in Sept24. As a result, the EBITDA margin contracted 4ppts QoQ to 28%. Utilization level improved to 65%, compared to 60% in 2Q24. No new outlets are expected to open in 4Q24, as the focus is shifted towards improving footfall and utilization. We expect operating costs to normalize further in 4Q24 as new ACCs and satellite clinics ramp up, driving stronger operating leverage and sequential earnings.
We make no changes to our earnings forecast and reiterate our BUY rating with a 12-month target price at RM0.80, based on a 25x PE multiple on 2025E EPS. We continue to like Optimax as a local niche operator in the eye-care segment, and its aggressive expansion plan drives its strong earnings growth prospects. Key downside risks to our call include lower- than-expected consumer spending leading to lower foot traffic in its centres and a shortage of licensed medical practitioners.
Source: Philip Capital Research - 28 Nov 2024