Alpha IVF set for record revenue, softer profit

PETALING JAYA: Alpha IVF Group Bhd is expected to deliver another quarter of record revenue despite softer earnings, as higher start-up costs tied to its aggressive regional expansion weigh on margins in the near term, according to TA Research.

Maintaining its “buy” recommendation on the fertility treatment provider, the research house said it expects the group’s new in-vitro fertilisation (IVF) centres to begin contributing more meaningfully to earnings over the medium term as they ramp up operations.

“We expect Alpha Kota Kinabalu and Manila centre to be Ebitda (earnings before interest, tax, depreciation and amortisation) positive in the fourth quarter (4Q26) of fiscal year ended May 2026 (FY26) and to achieve positive net profit by the next quarter,” it said.

TA Research said Alpha IVF remains confident the new centres will bear fruit and drive the group’s earnings over the medium term, underpinned by robust medical tourism and rising demand for IVF services.

The group is scheduled to announce its 4Q26 results this week, with TA Research forecasting quarterly net profit of between RM12mil and RM15.5mil, slightly below the RM16.1mil reported a year earlier, mainly due to higher pre-operating expenses associated with the new facilities.

The research house, however, expects the company to post record quarterly revenue, driven by stronger patient volumes from both domestic and overseas markets, particularly China, as well as contributions from its new full-fledged IVF centres in Kota Kinabalu and Manila.

Alpha IVF continues to expand despite near-term cost pressures, with the group aiming to open four additional full-fledged IVF centres by the end of 2027, with centres in Tuguegarao and Jakarta expected to commence operations later this year, while the Bali centre is targeted for mid-2027.

Meanwhile, the Johor centre has been delayed until December after taking longer than expected to obtain fire certification, resulting in additional staffing and training costs ahead of its launch.

TA Research also anticipates patient volumes from Indonesia, Alpha IVF’s largest overseas market, to recover after being affected by the depreciation of the rupiah and the implementation of Malaysia’s 6% sales and service tax on foreign patients.

“Nonetheless, we believe the impact has subsided as patients acclimatise to the new pricing environment. At the same time, we expect patients from China and Singapore to continue growing due to Alpha IVF’s high success rates,” it said.

Reflecting higher staff costs and continued margin pressure from pre-operational expenses, TA Research trimmed its earnings forecasts for FY26 to FY28 by between 5.7% and 7.9%. It lowered its target price to 33 sen from 37 sen, based on a price-to-earnings multiple of 22 times calendar year 2027 earnings, despite its overall positive view on the counter.