Alpha IVF Group Berhad: Inflection Point: Engine Starts Now

We initiate coverage on Alpha IVF Group Berhad, a renowned fertility care specialist, with a BUY recommendation and TP of RM0.36/share.

Investment Highlights:

1. Established brand and strong track record;
2. Medical tourism and exceptional PAT margin; and
3. Highly accomplished team and experience of medical specialists.

Leading the Way in Fertility Excellence & Innovation. Alpha IVF takes pride in consistently achieving a pregnancy success rate of 70–80%, significantly surpassing the global average of 60-65%.

Growing Industry. Alpha’s growth is driven by two key industry trends: (i) the medical tourism boom in Southeast Asia and (ii) increasing demand for ARS, fueled by a global decline in sperm counts and a growing number of women choosing to start families later in life.

Strong Position to Expand in an Accelerated Manner. Currently, the group operates three IVF centres in Malaysia and one in Singapore, with plans to at least double these by end-FY27. Alpha is targeting expansion into Johor, Sabah, Bali and two full-fledged specialist centres in the Philippines.

Imminent transfer to the Main Market? Under the accelerated transfer process, Alpha has met the Securities Commission’s (SC) requirements, including a daily market cap of at least RM1bn over the past six months and fulfilling the necessary profit criteria.

Deserves a Premium. We opine that our target PE of 23.0x is justified relative to peers at 21.0x, notably with Alpha’s gold standard IVF success rates and an exceptional PAT margin of 32.5% for FY25, significantly outperforming the peer average of 11.5%.

Earnings Summary

Background

Alpha IVF Group Berhad (Alpha) is a leading fertility care specialist, focusing on the provision of assisted reproductive services (ARS) in Malaysia, Singapore and Indonesia. Since its establishment in 2011, Alpha has built a strong reputation for excellence, with its brand consistently associated with high success rates in fertility treatments.

Alpha’s service offerings are categorized into two key business segments:

1. Assisted reproductive services – This includes all types of fertility treatment and procedures designed to help individuals and couples overcome infertility challenges. Key services include in vitro fertilisation (IVF), intracytoplasmic sperm injection (ICSI), cryopreservation and preimplantation genetic testing (PGT).
2. Other services – These encompass specialist medical services provided at third-party medical facilities, along with laboratory and related diagnostic services.

A key driver of Alpha’s success is its highly skilled medical team, comprising 17 specialists in Obstetrics and Gynaecology, supported by 35 nurses, 2 anaesthesiologists, 1 urologist, 44 embryologists, and 3 geneticists.

Figure 1: Alpha’s Services

Investment Thesis

1) Established Brand and Strong Track Record

Established in 2011, Alpha IVF has evolved into Malaysia’s leading fertility care specialist, with its name synonymous with exceptional success rates and groundbreaking advancements in fertility care. Recognised as a pioneer in the field, Alpha IVF continues to set new benchmarks, placing itself among the selected few fertility centres worldwide that consistently exceed the industry’s gold standard.

Figure 4: Exceeding Gold Standard Results

* The Vienna Consensus: report of an expert meeting on the development of ART laboratory performance indicators (RBMOnline 2017,35:494-510)
** Achieved 100.00% survival rate for 10,879 consecutive embryos and blastocysts from the freeze-thaw process since 2013.

2) Medical Tourism and Exceptional PAT Margin

Malaysia is recognized as one of the world’s leading destinations for medical tourism, with fertility treatments among the most sought-after services by international healthcare travellers. In-tandem with its premium IVF treatment and management quality, Alpha commands a superior PAT margin of 31.6% in FY24 and 32.5% in FY25, as compared to locally listed healthcare providers of 8.4-16.6% and regionally listed peers at 0.8-20.4%.

Figure 7: Malaysia’s Healthcare Service Providers and Industry PAT Margins in FY24

3) Highly Accomplished Team and Experience of Medical Specialists

Alpha boasts a distinguished team of highly qualified and experienced medical specialists. At its helm is Dato’ Colin Lee Soon Soo, the Group Managing Director, substantial shareholder, and Medical Director of Alpha KL. With over 40 years of industry expertise, Dato’ Colin is an internationally recognised leader and has produced more than a dozen world firsts in the fields of IVF, genomics, and stem cells, and over 50 firsts in Australia and Asia.

Future Plans and Growth Strategies

With fertility rates declining both locally and globally, the demand for IVF services has surged. In response, Alpha is poised to capitalize on this growing opportunity by strengthening its presence in Malaysia and across the region.

i. Local expansion: Establishing 2 new specialist centres in Malaysia.

The group is set to establish two new full-fledged IVF centres, one in Sabah and another in Johor, Malaysia. This strategic expansion aims to extend Alpha’s services to cities and areas with high demand, enhancing greater accessibility for patients.

ii. Regional expansion: 2 satellite clinics and 3 full-fledged IVF centres.

Alpha aims to leverage on its extensive experience in Singapore to expand into other international markets.

Indonesia: Alpha recently opened two new satellite clinics, PIK Jakarta and Surabaya in May and July 2025, respectively. The group is also planning to open a full-fledged IVF centre within the Sanur Healthcare Special Economic Zone in Bali, expected to be operational by early 2027.

The Philippines: The group plans to establish two full-fledged fertility centres in the Philippines. The first centre will be located in Quezon City, Manila, with operations scheduled to begin in October 2025. The second centre will be located in Tuguegarao and is expected to commence operations by May 2026.

Figure 9: Growth Plans and Progress

Key Risks and Industry Outlook

Key Risks Relating to Business and Industry

1. Aggressive Expansion Plans and Competition from Other IVF Centres: Alpha is pursuing an ambitious expansion strategy. While this expansion will significantly strengthen Alpha’s regional footprint, it is also expected to drive higher operating expenses, which may weigh on short-term profitability.
2. Dependent on Expertise of Consultants and Key Management: The growth and success of Alpha rely heavily on the expertise, experience and skill of its medical professionals. The loss of any medical specialist could jeopardize the group’s ability to retain or attract new patients.

Industry Outlook

Growing Industry: The IVF industry is both resilient and rapidly expanding, driven by underlying societal trends such as declining fertility rates, delayed parenthood and evolving lifestyles.

Government Support: Malaysia’s total fertility rate reached 1.7 in 2023, a slight rise from 1.6 in 2022, but still below the replacement level of 2.1 children per woman. The government is ramping up efforts to reverse the declining trend. Similarly, Singapore’s government offers co-funding and subsidies to support couples facing fertility issues.

Medical Tourism: Malaysia has emerged as a leading and highly attractive destination in the region for foreigners seeking fertility treatments. The Malaysian health tourism sector achieved a record-breaking revenue of RM2.7bn in 2024, up from RM2.2bn in 2023. Looking ahead, the Malaysia Healthcare Travel Council (MHTC) is targeting RM12bn in healthcare travel revenue by 2030.

Financial Performance

Alpha reported a record-high net profit of RM57.5mn for FY25, marking an 8.5% YoY increase, underpinned by a 5.5% rise in revenue to RM176.8mn. Revenue from Malaysian operations surged 16.0% to RM157.2mn, supported by sustained growth in foreign patient inflow, particularly from Indonesia and China. Overall, Alpha’s gross profit margin expanded by 2.5 pts to 60.6%, driven by a higher proportion of premium patients.

Figure 14: Financial Highlights

Earnings Forecast

Looking ahead, we project FY26 net profit to grow by 18.9% to RM68.3mn, driven by: (i) a rebound in Alpha SG operations, (ii) organic growth from existing centres, (iii) the addition of four new full-fledged IVF centres and (iv) increased demand from Chinese patients. Beyond that, we anticipate even stronger growth of 20.0% and 14.7% in FY27 and FY28, respectively.

Key Assumptions

ESG Considerations (★★★)

As part of its ESG assessment, Alpha places a strong emphasis on upholding the highest standards in responsible healthcare delivery. The group is committed to the following ESG practices below. Overall, we assign Alpha an ESG rating of three stars (★★★).

Valuation and Peers

Dividend Policy

Alpha intends to distribute a dividend of at least 60% of its annual net profit to its group shareholders. Assuming a dividend payout ratio of 70% from FY26F through FY28F, we project forward dividend yields to range between 3.4% and 4.7%.

Valuation

We value Alpha IVF at RM0.36/share based on a target PE of 23.0x CY26 EPS. Our valuation PE is at a premium of 10% over peers of 21.0x. This is premised on its proven track record, reliable in-house capabilities, robust expansion plans and superior margins. The potential listing transfer to the Main Market and a dividend yield of 3.8% for CY26 are expected to provide further support for the share price.

Figure 16: Peers Comparison

Financial Statements

Income Statement

Balance Sheet

Cash Flow

Appendices

Appendix 1: IVF Process Lifecycle

1. Ovarian stimulation: Initial medical consultation and pre-treatment, followed by fertility medication (2 weeks).
2. Egg retrieval and Sperm retrieval: Trigger final maturation of eggs, then eggs and sperm are retrieved.
3. Fertilisation and embryo culture: ICSI/Petri dish fertilisation. Culture fertilised eggs for 5-7 days until they reach the blastocyst stage.
4. Embryo transfer:
   • Fresh Embryo Transfer: Immediately transferred to the uterus.
   • Frozen Embryo Transfer: The blastocysts are frozen and transferred to the uterus at a later date. Excess embryos can be preserved.
5. Pregnancy test: Performed two weeks after embryo transfer.

Appendix 2: Key Facilities Available in Alpha IVF

• Andrology Laboratory
• IVF Chamber
• ICSI Chamber
• PIEZO-ICSI
• PCR Laboratory
• Time-lapse Incubators
• PGT Laboratory – NGS
• Cryo-storage For Sperm
• Operating Theatre
• Embryology Laboratory
• Cryo-storage Laboratory

Appendix 3: Alpha’s 1st Satellite Clinic in Pantai Indah Kapuk, Jakarta

Highlights

• Patient visits of 154 since May till June 2025.
• 33 patients referred to Malaysia centres.
• The 4 satellite clinics are expected to contribute at least a 20% y-o-y growth in Indonesian patient volume.
• First pregnancy from Alpha IVF KL.