| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Performance Review
A Malaysian healthcare group reported a core net profit of RM8 million for FY25, a 7% year-on-year decline, yet this figure surpassed consensus estimates by 14% and aligned with the investment bank’s own projections. For the fourth quarter of FY25, the company demonstrated stronger sequential earnings, with revenue rising 6% quarter-on-quarter to RM12 million. This improvement was primarily fueled by enhanced contributions from its manufacturing and distribution segments, which grew 11% and 2% respectively. Notably, the EBITDA margin for 4QFY25 expanded by 8.3 percentage points quarter-on-quarter to 34.5%, largely attributed to stringent cost efficiencies.
Despite the positive sequential performance, the full-year FY25 revenue saw an 11% year-on-year decrease to RM49 million. This decline was primarily a result of softer demand for medical devices and consumables across both public and private hospitals, impacting both manufacturing and distribution segments equally by an 11% reduction.
Future Outlook and Investment View
The investment bank anticipates a sequential improvement in the group’s core net profit in the coming quarters. This positive outlook is underpinned by stronger manufacturing orders and an expected improvement in plant utilization rates. The company’s expansion plans are progressing as scheduled, targeting a full capacity of 12 million units per year by the first quarter of CY26. Earnings growth for FY26 is expected to be driven by the phased ramp-up of this new capacity and an acceleration in export momentum.
The investment bank maintains its “BUY” rating with an unchanged 12-month target price of RM0.45, based on an 18x PE multiple on FY26E earnings per share. The rating reflects confidence in the manufacturing segment’s growth trajectory, supported by capacity doubling and robust global demand, alongside a healthy pipeline of new product introductions designed to broaden revenue streams. Current valuations are deemed undemanding, with the stock trading at a significant discount below its 3-year historical mean. Potential downside risks to this optimistic view include a possible slowdown in demand for medical equipment, operational disruptions, and the loss of key licenses.
