Summary
Optimax’s 4QFY24 core net profit declined by 3.4% qoq and 4.1% yoy to RM3.1m, bringing the FY24 CNP to RM13.0m (+0.7% yoy) which is within our expectations at 95.0% of our full-year forecast, but slightly missed consensus’s forecast at 92.3%.
Near-term growth will be supported by the 3 new ACC yet to matured, both expected from FY25 onwards.
After incorporating FY24 results, we adjust our FY25F/FY26F earnings forecasts by -2.2%/-0.3% in anticipation of higher operating expenses from commencement of Kempas and Selgate.
Re-iterate BUY recommendation, but with a slightly lower target price of RM0.69 (from RM0.70), derived by FY25F EPS of 3.1 sen pegged to 22.0x PE multiple, and ascribed with three-star ESG rating.
Within expectations. Optimax’s FY24 core net profit (CNP) of RM13.0m (+0.7% yoy) was in line with our expectations but missed consensus full-year forecasts, accounting for 95.0% and 92.3%, respectively.
Higher Dividend. The Group declared a second tax-exempt interim dividend of 0.5 sen in 4QFY24 (4QFY23: 0.6 sen), bringing the YTD DPS to 1.3sen (FY23: 1.2 sen).
YoY. CNP decline 4.1% yoy to RM3.1m, driven by higher opex incurred in both 3QFY24 and 4QFY24 due to newly opened ACCs, such as marketing expenses to promote newly opened ACC and Neumax Clinic for brand awareness and higher training costs. Meanwhile, revenue shows a 9.2% yoy growth to RM34.3m. Growth was mainly driven by contributions from newly established satellite clinics that obtained operating licenses this quarter (locations: Kota Kinabalu, Atria, and Cambodia).
YTD. On the full-year basis, FY24 CNP remained flat (+0.7% yoy) at RM 13.0m due to more ACCs coming online and higher OPEX incurred in these new ACCs, such as pre-operation costs for the Cambodia ACC (RM3.0m), additional headcount stations in new ACCs, higher depreciation expenses from new assets, and additional marketing expenses for brand awareness at the newly opened ACC and Neumax Clinic.
QoQ. CNP decreased by 3.4% qoq, despite a 3.7% yoy increase in revenue. The decline is primarily attributed to higher minority interest.
Outlook. Looking ahead, we expect staff and depreciation costs to remain elevated stemmed from additions of pre-operation expenses for Kempas Eye Hospital, which is slated to begin in 2QFY25, assuming the hospital is ready to commence operations in 3QCY25. Additionally, with Selgate Hospital expected to start in CY2026, we anticipate that staff costs may continue to be elevated, by increasing RM2-4m in FY25 and FY26.
Earnings Revision. After incorporating the FY24 actual results, we have trimmed our FY25 and FY26 earnings forecasts by -2.2% and -0.3%, respectively, as we anticipate that operating expenses may continue to be elevated in FY25 and FY26 following the commencement of Kempas and Selgate. Additionally, we are introducing our FY27 earnings forecast of RM18.3m.
Valuation. We reiterate our BUY recommendation with a slightly lower target price (TP) of RM0.69 (from RM0.70), based on a 22.0x PE multiple and a three-star ESG rating. This PE multiple is derived from Optimax's 2-year historical average, applied to the FY25F EPS of 3.1 sen, which is nearly equivalent to Optimax's 2-year average historical PE of 21.5x. We remain confident in Optimax’s prospects, supported by the Group's market-leading position in cataract and refractive surgeries, advanced medical technology, and aggressive expansion plans.
Risk. (i) Exposed to foreign exchange risk with potential short-term increases in material costs and freight charges, (ii) Changes in hospital agreements.
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Currency | Buy Rates (RM) | Sell Rates (RM) |
---|---|---|
USD | 4.425747 | 4.460392 |
EUR | 4.895220 | 4.904713 |
CNY | 0.606938 | 0.608107 |
HKD | 0.568828 | 0.573311 |
SGD | 3.311739 | 3.338136 |