OPTIMAX: Eye-Care Specialist Anticipates Robust Earnings Growth, BUY Rating Maintained

Analysts have maintained a “BUY” rating on the eye-care specialist, anticipating robust earnings growth through 2026 and beyond. This positive outlook is underpinned by strategic expansion initiatives, improving operational efficiencies, and a strong recovery in the medical tourism segment.

Performance Drivers and Recent Developments

The company is poised for higher sequential earnings in 4Q25, with core earnings projected to reach RM3.5-4.0 million, up from RM2.8 million in 3Q25 and RM3.1 million in 4Q24. This growth is primarily driven by increased patient volumes, enhanced footfall at recently opened satellite clinics and centres in locations such as Kota Kinabalu, Kuching, and Cambodia, which began contributing to earnings in 4Q25. Management targets lifting overall operating theatre utilisation from approximately 60% to 70-75% by end-2026, supported by targeted digital marketing initiatives.

Medical tourism, a significant revenue contributor (currently c.10% of total revenue, targeting >20% by end-2026), has shown strong momentum. Following a 20% year-on-year decline in foreign patient volumes in 3Q25 due to the Sales and Service Tax (SST) implementation, volumes have gradually improved as patients adjust to the new pricing. The group expects further boosts from national initiatives like “Visit Malaysia 2026” and “Malaysia Year of Medical Tourism (MYMT) programs, coupled with its active participation in Malaysia Healthcare Tourism Council (MHTC) roadshows. The increasing preference for faster recovery and less invasive options is also driving a shift towards premium surgical procedures.

Strategic Expansion and Future Outlook

The group’s strategic expansion remains on track, with two new hospitals—Selgate Specialist Hospital and Kempas Eye Specialist Hospital—expected to complete construction in 2Q-3Q26. Similarly, renovation works for a new Ambulatory Care Centre (ACC) in Jakarta, Indonesia, are underway and targeted for completion by 3Q26. These new facilities are expected to begin contributing to earnings from 2028 onwards, with services mirroring existing ACCs but at approximately 10% higher pricing.

Analysts forecast the company’s revenue to grow by 8-11% over 2025-27E, underpinned by rising surgical volumes and higher utilisation rates. Core earnings are anticipated to grow modestly by 4% in 2025, partially offset by higher operating costs associated with the ramp-up of new centres. However, earnings are expected to accelerate significantly by 27% in 2026E and 18% in 2027E, driven by improved operating leverage as the newer centres mature. The management indicated a focus on optimising and uplifting utilisation across existing ACCs, with no immediate plans for further new centres.

Recommendation and Risks

The investment bank maintains a BUY rating, with an unchanged 12-month target price of RM0.79, based on a 25x PE multiple on 2026E estimated EPS. Current valuations are considered undemanding, with the stock trading at -1 standard deviation below its 3-year mean.

Key downside risks to the rating include potential lower consumer spending leading to reduced foot traffic, increased competition from other private and public eye care providers, high dependence on key medical personnel such as surgeons and optometrists, and potential shortages of licensed medical practitioners, along with reliance on necessary regulatory approvals and licenses.