Sights set on multi-year growth
? We initiate coverage with Add & TP of RM1.47 (28x CY23F P/E) on Optimax,
the largest Malaysia-listed private eye specialist services provider in CY20.
? We see robust FY21-24F EPS CAGR of 14.7%, mainly driven by its network
expansion plan & improving revenue intensity; this is a key re-rating catalyst.
? Its growth prospects will also be supported by the ageing population, rising
affluence/insurance penetration & benign competition, in our view.
Established eye specialist services provider
Optimax, which was listed on the ACE Market in Aug 20 at RM0.30/share, now has a
market cap of RM329m (US$78m). It is the largest Malaysia-listed private pureplay eye
specialist services provider in CY20, with 13 centres nationwide currently. It is involved in
treatment of eye diseases/disorders (mainly cataract), refractive/oculoplastic surgeries,
eye examinations, marketing of food products and Covid-19 vaccinations (since May 21).
Initiate with Add and target price of RM1.47
We initiate coverage on Optimax with Add and RM1.47 TP, pegged to 28x CY23F P/E
(0.8 s.d. below AIER’s 10-year mean) and after factoring in potential dilution from full
conversion of outstanding warrants into shares. After the 26% share price drop since Apr
21 (possibly due to overhang from warrants), its FY22F P/E is at attractive 50% discount
to (0.9 s.d. below) AIER’s 10-year mean. Re-rating catalysts: i) strong EPS growth during
FY22-24F, and ii) a rise in its institutional holdings (early-May 21: c.9%). Downside risks:
expansion plan delays, longer gestation for new centres and further severe MCOs.
Projecting robust 3-year core EPS CAGR of 14.7%
We expect Optimax to post a strong 3-year core EPS CAGR (FY21-24F) of 14.7%, driven
by: a) robust growth in the number of cataract/refractive surgeries done, b) improving
revenue intensity on take-up of newer-generation procedures and muted competition, c)
more meaningful contribution from new centres, and d) normalisation of effective tax rate.
These are partly offset by the tapering of Covid-19 vaccination revenue to nil by FY23F.
Attractive proxy for ageing population and rising affluence
With its established track record, Optimax is poised to benefit from the rapidly ageing
population and rising medical insurance penetration as we think cataract surgeries will
form c.31% of FY22F revenue (ex-Covid-19 vaccination services). Demand for refractive
surgeries (c.37% of revenue) should also be boosted by improving affluence. We project
capex of RM11m-12m p.a. in FY22-24F as it expands its network to drive future growth.
Riding on the tailwinds of a favourable competitive landscape
Our channel checks and analysis show that market competition is fairly benign due to: i)
the limited number of large players, ii) rational pricing and marketing practices, iii) major
players’ healthy ROICs, and iv) fairly high barriers to entry given the industry’s highlyregulated nature. This should help sustain the growth of its revenue intensity, in our view.