Healthy outlook underpinned by expansion

■ Optimax’s stock traded ex-bonus (1-for-1 bonus) today, which we reflect in
our core EPS and DPS forecasts, as well as TP of RM0.77 (28x CY23F P/E).
■ We reiterate our Add call as we project strong FY21-24F core EPS CAGR of
18.2%, driven by its network expansion plan and improving revenue intensity.

1-for-1 bonus issue goes ex today

Optimax’s share price traded ex-bonus (1-for-1 bonus issue) today. The exercise was
mainly undertaken to reward its shareholders and broaden its shareholder base. While
this will not have any fundamental impact on the company, we are slightly positive on it
as it should help to enhance the stock’s liquidity and near-term trading sentiment.

Set to record healthy yoy earnings growth in 1Q22F, in our view

We gather that the number of surgeries performed by Optimax in 1Q22 was higher yoy
(>2k surgeries or >10% higher yoy, in our view). We attribute this to: i) pent-up demand
after the full movement control order (FMCO) was lifted in 3Q21, and ii) closure of
Malaysia’s international travel borders, possibly causing the affluent segment to divert
spending from travel to eye surgeries. Hence, we believe that Optimax may stage decent
yoy core EPS growth in 1Q22F, albeit potentially weaker qoq due to negative seasonality
and tapering contribution from Covid-19 vaccination services. Forward surgery
appointments are also at healthy levels, which bodes well for surgery count in 2Q-4Q22F.

Network expansion plans to spur future earnings growth

Optimax aims to establish a new ambulatory care centre (ACC) in Bahau, Negeri
Sembilan, and a maiden satellite clinic in Taman Sutera Utama, Skudai, Johor, in 2Q22F.
It also plans to set up an additional 4-9 satellite clinics this year and is looking to expand
to the East Coast of Peninsular Malaysia. We expect it to open 4 new centres (1 ACC, 3
satellite clinics) in FY23F and 3 centres (2 ACCs, 1 hospital) in FY24F, with the latter
being enabled by its Memorandum of Understanding with Selgate Healthcare. Overall,
we see Optimax adding a total of 13 branches in FY22-24F (current: 13 branches).

Beneficiary of ageing population and rising consumer affluence

With its established track record, Optimax is poised to capitalise on Malaysia’s rapidly
ageing population and rising medical insurance penetration as we think cataract
surgeries will form c.32% of its FY22F revenue (ex-vaccination services). Demand for
refractive surgeries (c.38% of revenue) should also be boosted by growing affluence.

Reiterate Add with an ex-bonus TP of RM0.77 (28x CY23F P/E)

We trim our FY22-24F core EPS by 1.3-3.0% due to housekeeping adjustments. Thus,
our ex-bonus TP falls slightly to RM0.77, still based on 28x CY23F P/E (45% below AIER
Eye Hospital Group’s 10-year mean, due to Optimax’s smaller market cap and lower
trading liquidity). We see robust FY21-24F EPS CAGR of 18.2% as a re-rating catalyst.
Downside risks: expansion delays, longer gestation for new centres and further MCOs.