PETALING JAYA: Analysts expect Alpha IVF Group Bhd’s upcoming financial quarters to deliver robust momentum, backed by its expanding regional footprint.
In a report, UOB Kay Hian (UOBKH) Research said the fertility care specialist is set to add IVF centres in Sabah and Manila, followed by centres in Johor and Tuguegarao by the end of its financial year.
The new additions will complement its existing four full-fledged IVF centres across Malaysia and Singapore, as well as two satellite clinics in Indonesia and two representative offices in China.
“These additions will materially expand the group’s presence, up from a low base of just four existing IVF centres, providing strong visibility for sustained growth. The group also has industry-leading clinical success rates and proven execution of new expansion,” UOBKH Research said in its latest report on the company.
The research house said Alpha IVF posted a strong quarter with record-high sales, registering a first-quarter core profit of RM15.3mil. This was within UOBKH Research’s expectation, with earnings accounting for 22% of both its and consensus full-year estimates.
The growth was primarily driven by an increase in foreign patients, despite a marginal decline in domestic volumes.
UOBKH Research said demand remained resilient even after the 6% sales and service tax on foreign patients took effect in July, underscoring Alpha IVF’s strong market positioning and the appeal of its industry-leading clinical success rates.
“We expect sequential growth over the subsequent quarters from the gradual influx of patients, and the normalisation of marketing expenses and the effective tax rate, which will result in earnings meeting full-year forecasts,” the research house said.
On Alpha IVF’s margins, UOBKH Research said gross margin grew 0.7 percentage points (ppt) year-on-year but softened by 0.8 ppt quarter-on-quarter (q-o-q) to 60.4%.
The sequential decline was mainly due to higher commission payouts to its China agents and increased promotional packages to optimise higher staff throughput.
Earnings before interest, taxes, depreciation and amortisation margin also eased by 1.8 ppt q-o-q, owing to elevated marketing activities during the quarter, which are expected to normalise over the rest of the year.
UOBKH Research maintained its “buy” call on Alpha IVF with a target price of 43 sen per share, citing compelling growth prospects and a decent yield at attractive valuations.
