Broker: UOB Kay Hian
Date of Report: 5 August 2025

Alpha IVF Group: Driving Regional Growth with Proven Execution and Strategic Expansion

Company Overview: Alpha IVF Group Bhd

Alpha IVF Group Bhd is a leading fertility centre operator in the ASEAN region, renowned for its advanced medical technology, high clinical success rates, and a team comprising top doctors and embryologists. The group has achieved significant milestones in fertility treatments both regionally and globally.

Major Shareholders:

• Dato’ Dr. Lee Soon Soo: 43.2%
• Lee Soon Ai: 8.9%
• Ng Peng Wah: 8.3%

Scaling Regional Operations: Strategic Expansion Across Asia

Alpha IVF is executing a robust regional growth strategy, targeting underserved markets and niche segments in neighboring countries. The company’s expansion, leveraging a low operating base, is projected to drive a strong three-year earnings CAGR of 29.0% for FY25-28. The recent launch of new facilities highlights Alpha IVF’s impressive execution capability and sets the stage for accelerated expansion.

China Rollout: Early Success and Future Potential

• Marketing offices established in China (Sep 2024, Jan 2025) have driven a surge in foreign inpatients.
• Patient contributions from China grew by 173% year-on-year in FY25, now comprising 20% of group revenue.
• Growth fueled by strategic collaborations with local hospitals and a direct-to-consumer approach via social media, enabled by a physical presence in China.
• Alpha IVF aims to grow Chinese patient contributions by at least another 30% year-on-year in FY26.

New Facilities: Rapid Ramp-Up and Profitable Performance

• Al-haya, Alpha IVF’s newest facility, started in April 2024 and achieved profitability in its first full year, contributing RM2m to the bottom line with a 20% net margin.
• The centre broke even in the first month, similar to Alpha Singapore, demonstrating the group’s ability to replicate success rapidly across regions.
• The capex-light business model, high revenue intensity (over RM50,000 per oocyte pick-up), and onboarding of established IVF specialists support rapid and low-risk expansion.

Philippines Expansion: Serving Underserved Markets

• Alpha IVF plans to open two facilities in the Philippines in FY26: one in Quezon City, Metro Manila, and another in Tuguegarao, Northern Luzon.
• These regions have catchment populations of 20 million and 23 million, respectively, with limited IVF providers currently.
• Each centre will have at least three IVF specialists. Break-even is anticipated within a few months, but financial projections assume break-even within the first year.

Key Financial Highlights and Performance Metrics

Expanding Domestic and Regional Footprint

Malaysia: New Centres in Sabah and Johor

• Two new IVF facilities are planned in Sabah and Johor, complementing existing operations in Penang and Kuala Lumpur.
• These sites are strategically chosen to attract foreign inpatients and access new catchment areas.
• Johor and Sabah centres are expected to begin operations in 2QFY26 and 4QFY26, respectively.

Indonesia: Satellite Clinics and Main Facility in Bali

• Two satellite clinics launched in Indonesia have already reached break-even.
• Two additional satellite clinics are scheduled for launch by end-2026, serving as referral and follow-up hubs for main centres in Kuala Lumpur and Penang.
• The first full-fledged IVF facility in Indonesia will be established in Sanur, Bali, with operations commencing in early 2027.

Upcoming Growth Drivers

• Increased patient volume from China due to new sales offices in Shanghai and Guangzhou.
• Expansion of satellite clinics in Jakarta and broader Indonesia.
• Launch of four new IVF facilities in the Philippines (Metro Manila, Northern Luzon) and Malaysia (Sabah, Johor).
• Bali IVF centre set to open in early FY27.
• Expansion builds on a low base of just four existing IVF centres, promising substantial growth potential.

Robust Balance Sheet and Attractive Dividend Yield

• Alpha IVF raised substantial capital during its IPO in March 2024, boosting its cash reserves to RM155m.
• This strong cash position is sufficient to fund capex-intensive activities planned for FY26-27, with the company expected to remain net cash positive throughout the forecast period.
• The company has increased its FY25 dividend payout to 85%, well above its stated policy of a minimum 60% of net profit.
• For FY26-28, a conservative 70% payout is assumed, implying dividend yields between 3.6% and 6.3%.

Earnings Forecast, Risks, and Valuation

• No changes to earnings estimates at this time.
• Key risks include execution risk for new facilities, reputational risks, and dependence on key personnel.

Alpha IVF is rated as a BUY with a target price of RM0.35, based on a PE multiple of 20x for 2026, in line with sector peers. A successful overseas track record could prompt higher valuation as earnings visibility improves.

Environmental, Social, and Governance (ESG) Initiatives

• Environmental: Implements energy-efficient equipment and responsible medical waste management, including recycling initiatives.
• Social: Adheres to ethical patient practices, informed consent, privacy protection, and fosters diversity and inclusion among staff and patients.
• Governance: Board of directors provides oversight of operations and ESG strategies.

Key Operating Assumptions and Growth Outlook

Detailed Financial Projections

Conclusion: A Robust Play on Fertility and Regional Healthcare

Alpha IVF Group Bhd stands out in the ASEAN healthcare sector with its aggressive yet prudent expansion strategy, robust financials, and strong execution track record. Its move into China, the Philippines, Indonesia, and further expansion in Malaysia position it for significant growth. Backed by a high cash balance, attractive dividend policy, and industry-leading clinical outcomes, Alpha IVF presents a compelling investment opportunity with the potential for further upside as its regional footprint matures.