OPTIMAX: Earnings Dip Below Forecasts on Rising Costs, Long-Term Outlook Remains Positive

A recent investment bank research report indicates that the company’s third-quarter fiscal year 2025 (3QFY25) core net profit of RM2.8 million fell 12.4% year-on-year, significantly below both the bank’s and consensus expectations, missing full-year forecasts by 63% and 64% respectively. This outcome was despite a robust increase in revenue.

Performance Review

The decline in profitability was primarily attributed to higher staff costs and increased depreciation expenses stemming from newly established centers. Operating expenses also rose due to the hiring of additional medical staff, including doctors, nurses, optometrists, and supporting personnel for new ambulatory care centers (ACCs) and satellite clinics. Consequently, the company’s Pre-tax Profit (PBT) margin marginally slipped to 13.1% in 3QFY25 from 13.8% in 3QFY24.

Despite the earnings dip, the company reported a 6.3% year-on-year increase in revenue, reaching RM35.2 million in 3QFY25. This growth was driven by effective marketing initiatives, including online promotional campaigns, and new income streams from recently launched aesthetic clinics, Neumax, and satellite centers in East Malaysia and Cambodia. The company’s Cambodian operations notably registered over 100% year-on-year growth, contributing RM1.2 million in 3QFY25. Quarter-on-quarter revenue saw moderate growth, although patient volumes were tempered by multiple long weekends and public holidays during the quarter.

Future Outlook and Investment Rating

The investment bank remains optimistic regarding the company’s long-term growth trajectory, which is underpinned by ongoing strategic expansion and regional partnerships. Newly launched ACCs in Atria Mall and Cambodia are achieving self-sustaining levels, with utilization expected to improve further in coming quarters. The group’s continued focus on expanding its footprint in Southeast Asia and introducing advanced technologies are expected to reinforce its growth. While near-term earnings may face moderation due to higher costs, the increasing demand for healthcare services, fueled by rising health awareness, positions the company for sustainable growth.

Based on this assessment, the investment bank has reiterated its “Outperform” call on the company. However, reflecting the higher operating costs, the target price has been adjusted downwards to RM0.72, based on a FY26F 23x P/E, which is in line with its one-year average forward P/E. An interim dividend of 0.8 sen per share was also proposed.