UOB Kay Hian
Date of Report: 29 July 2025

Alpha IVF Group Bhd: Riding High on Record Earnings and Regional Expansion

Overview: Alpha IVF Group Bhd’s Impressive Growth Story

Alpha IVF Group Bhd, a leading provider of fertility services in the ASEAN region, continues to outperform expectations with robust earnings, record patient volumes, and aggressive regional expansion. The company has maintained its BUY recommendation, with a target price of RM0.35, reflecting a promising 27.3% upside from the current share price of RM0.28. The latest quarterly results showcase a preview of accelerated growth, driven by new operations in Indonesia, and upcoming facility launches in the Philippines and Malaysia.

Company Snapshot

• Sector: Health Care
• Market Cap: RM1,336.5 million (US\$316.2 million)
• Shares Issued: 4,860.0 million
• 52-week High/Low: RM0.375 / RM0.295
• Major Shareholders:
  • Dato’ Dr. Lee Soon Soo: 43.2%
  • Lee Soon Ai: 8.9%
  • Ng Peng Wah: 8.3%

Latest Financial Performance: Q4 FY2025 Results

Alpha IVF delivered another record-breaking quarter in Q4 FY25, with revenue climbing to RM50.0 million, up 23.2% quarter-on-quarter and 7.0% year-on-year. This growth was fueled by the maiden contribution from its Indonesia operations and a surge in foreign patient volumes. Margins recovered after earlier start-up costs, resulting in a core PATAMI of RM16.1 million, which was broadly within expectations at 98% of UOB Kay Hian and 97% of consensus full-year estimates.

Margin Highlights

• Gross Profit Margin: 61.3% (up 0.8ppt QoQ, 1.4ppt YoY)
• EBITDA Margin: 46.9% (up 4.3ppt QoQ, 2.4ppt YoY)
• PATAMI Margin: 42.7% (up 1.2ppt YoY)
• Margins rebounded due to reduced start-up costs and a better foreign patient mix.

Key Financials: 2024–2028 Outlook

Expansion and Growth Engines

• Q4 FY25 revenue primarily driven by foreign patient growth and the new satellite facility in Indonesia.
• Over the next 12 months, Alpha IVF plans to add:
  • Two new IVF centers each in Malaysia and the Philippines
  • One IVF center and two satellite clinics in Indonesia
• These will complement the existing network of four full-fledged IVF centers in Malaysia and Singapore, two satellite clinics in Indonesia, and two sales offices in China.

Margin Outlook and Profitability

• Gross margin improved due to a higher proportion of foreign patients and absence of start-up costs.
• EBITDA margin expanded significantly, reaching 46.9% in the latest quarter.
• PATAMI margin for FY25 was 32.5%, with expectations for slight margin dilution in FY26 due to expansion, but no anticipated losses.

Strategic Impact and Future Prospects

• Continued growth is expected, powered by:
  • Increased patient volume from China, thanks to new sales offices in Shanghai and Guangzhou.
  • Expansion of satellite clinics in Indonesia and launch of new IVF facilities in the Philippines, Indonesia, and Malaysia in 2026.
• Alpha IVF maintains a strong balance sheet, with high net cash and low debt, supporting its expansion plans.

Risks and Valuation

• No major changes to earnings forecasts at this time.
• Key risks include execution challenges with new facilities, reputation risk, and dependence on key personnel.
• Valuation is pegged at a PE of 20x, rolled over to 2026, aligning with sector peers but contingent on successful overseas expansion for further re-rating.

Environmental, Social, and Governance (ESG) Initiatives

• Environmental: Focus on energy efficiency and responsible medical waste management.
• Social: Commitment to ethical practices, patient privacy, and diversity and inclusion.
• Governance: Strong board oversight, including ESG strategies and performance monitoring.

Key Assumptions and Projections

Cash Flow and Balance Sheet Strength

• Strong cash generation from operations, projected to rise from RM54.9 million in FY25 to RM132.3 million in FY28.
• Significant investments in growth (RM55.0 million capex projected for FY26), offset by robust cash reserves and prudent financial management.
• Low debt levels; net cash position supports ongoing expansion and dividend payments.

Conclusion: Alpha IVF Positioned for Continued Outperformance

Alpha IVF Group Bhd stands out in the healthcare sector with its impressive track record, leading clinical outcomes, superior profit margins, and ambitious international expansion strategy. The company’s robust financials, operational excellence, and ESG commitment make it a compelling choice for investors seeking growth in the healthcare space. With new centers coming online and a strong push into regional markets, Alpha IVF is well-positioned for sustained earnings growth and value creation.