PETALING JAYA: Despite the anticipated near-term softness in its financial year ending May 31, 2026 (FY26), arising from pre-operating startup costs for its four new in vitro fertilisation (IVF) centres, analysts remain optimistic about Alpha IVF Group Bhd’s outlook for FY27.
“We expect the newly opened Alpha Kota Kinabalu and Alpha Manila to achieve profitability by the second half of FY26,” TA Research said, adding that it was maintaining its “buy” recommendation with an unchanged target price of 37 sen for the stock.
At the time of writing, the group’s stock trading at 28 sen apiece.
TA Research noted that Alpha’s 2Q26 net profit declined by 20.5% on a year-on-year (y-o-y) basis to RM12mil, despite revenue increasing by 9.4% y-o-y to RM47.3mil.
The weaker performance was mainly attributed to the 6% sales and services tax (SST) imposed on foreign patients from last September, a stronger ringgit, and promotional activities undertaken to attract more local patients. Alpha IVF also absorbed the SST for some of its foreign patients.
The research house added that start-up costs related to four new full-fledged IVF centres – Alpha Kota Kinabalu and Alpha Manila, which both opened last December, as well as the upcoming Alpha Johor and Alpha Tuguegarao in the Philippines, negatively impacted its bottom line by about RM2mil.
It is also worth noting that the group typically incurs additional training expenses for staffing, doctors, and embryologist three to six months prior to the opening of a new IVF centre.
TA Research said the group will absorb only 3% of the SST going forward, with the remaining 3% to be passed on to foreign patients starting January.
“Looking ahead, China patient volumes are expected to rise, particularly at Alpha IVF’s Genesis centre in Penang, supported by direct flights between Chengdu and Penang. Chengdu represents a new market for Alpha IVF, and the group has already secured at least three agents to channel potential customers.”
On the two new full-fledged IVF centres opened last December, in Kota Kinabalu and in Manila, TA Research said Alpha Kota Kinabalu recorded 112 patient visits last December, which is expected to increase to 179 visits this month.
“As such, we anticipate that the facility will achieve profitability by its second month of operations. In contrast, Alpha Manila may take slightly longer to reach breakeven, as patient volumes last December were affected by the Christmas and New Year holiday period in the Philippines.”
The research house has not made any change to its earnings estimates for Alpha IVF for FY26 to FY28.
