PETALING JAYA: Eye specialist service provider Optimax Holdings Bhd
is poised to chart improvement in earnings with a strong core earnings per share (EPS) growth over the next few years.
This is in line with its aggressive expansion drive and improved economies of scale.
In view of the high utilisation factor at some of its centres, Optimax planned to open seven satellite clinics in Peninsular Malaysia and up to two new ambulatory care centres (ACC) by year-end.
CGS-CIMB Research forecast, in tandem with its network expansion, coupled with improved economies of scale and a lower effective tax rate for financial year 2023 (FY23), a healthy core earnings per share growth of 23.2%, 33.2%, 32.6% year-on-year (y-o-y) in FY23, FY24 and FY25 respectively.
“Overall, we project Optimax to expand its network to about 30 centres by end-2025 (versus 15 as at end-2022) to capitalise on the structural demand for eye surgeries due to rapidly ageing population, greater eye health awareness and rising medical insurance penetration.
“These include a new ACC at Selgate’s Setia Alam hospital (expected completion in the third quarter of 2024), a new eye hospital in Kempas, Johor (expected completion by end-2024), potential eye hospital in Sri Hartamas and potential expansion to the east coast of the peninsular,” it added.
The research house, which is reiterating its “add” call on the company with a target price of RM1.11, said the key potential rerating catalyst for Optimax would be its strong earnings delivery in FY23 to FY25.
Key downside risks include delays in its expansion, longer gestation for its new centres and further severe Covid-19 waves.
Optimax said, at its fourth quarter 2022 (4Q22) results briefing, that its revenue rose y-o-y in January and February, leading the research house to believe that 1Q23 forecast revenue would likely be up y-o-y, albeit seasonally weaker quarter-on-quarter amid the festive period.
Its 4Q22 revenue grew 6.8% y-o-y, partly driven by the maiden contribution from its new ACC in Bahau that opened in October last year and satellite clinic in Cheras, which was opened in November last year.
In its notes on its 4Q22 performance, Optimax said with the easing of standard operating procedures and relaxed restrictions, the performance of some branches of the group had improved.
The company said businesses of some branches had returned to pre-Covid-19 levels.
“Meanwhile, the resurgence of Covid-19 infections, inflationary pressure due to rising food and energy prices and disrupted supply chains following the Russia-Ukraine war are threats to both the local and global economy.
“The group will continue to monitor its operational costs and seek strategic locations to set up more ambulatory care centres or satellite clinics to support its growth.”
