28-05-2025
- Business
- New Straits Times
Fertility fatigue weighing on Alpha IVF shareholders
KUALA LUMPUR: When Alpha IVF Group Bhd delivered its initial public offering (IPO) in March last year at 32 sen per share, the mood was expectant, much like the clients it serves.
As a specialist in fertility treatments, Alpha IVF operates in a resilient, emotionally resonant niche of the healthcare sector, industry observers said.
The outlook seemed strong, with its compelling narrative and branding on point.
But fast forward a year, and the share price has dipped to around 28 sen, despite glowing brochures, media coverage and several investor briefings.
At midday today, the stock settled 1.75 per cent lower at 28 sen. Year-todate, it has shed 17.65 per cent or six sen.
The company may help create new life, but on Bursa Malaysia, investors are now asking why Alpha IVF is not breathing more life into its financial performance.
Administrative Costs: A Growing Burden
In its third quarter of financial year 2025, Alpha IVF reported a 12.4 per cent decline in net profit, even as revenue increased.
Why? A 76.4 per cent surge in administrative expenses, which ballooned to RM9.56 million, the observers said. These include staff costs, professional fees and other operating overheads.
The message to investors: revenues are growing, but profits are not keeping up.
Margins Under Pressure
From a net profit margin of 39 per cent in FY2023, Alpha IVF slipped to 32 per cent in FY2024.
In a high-stakes industry where precision and people matter, cost control is always tricky but the margin squeeze is triggering doubts about how scalable and efficient the business model truly is, the observers said.
Earnings Quality: Real or Just on Paper?
Another worry lies in the company's accrual ratio of 0.42. While Alpha IVF is profitable on paper, the ratio implies that a significant chunk of that profit isn't flowing into its coffers as cash, the observers said.
For discerning investors, strong cash flow is the bedrock of trust.
The fear? Profits without liquidity could mean trouble during expansion or downturns.
Lofty Valuation
With a current price-to-earnings (P/E) ratio of 26 times, Alpha IVF is trading above its estimated fair value of around 22.3 times.
The observers said that kind of premium demands near-flawless execution, and the company's recent numbers have not yet delivered the confidence to justify such a valuation.
Sentiment: From Excitement to Uncertainty
The observers said despite experienced doctors, high-tech labs and a vital social mission, Alpha IVF is grappling with what some call "fertility fatigue" - not among patients, but among shareholders.
The promise of a growing fertility market remains, but costs are rising, earnings quality is in question and the stock has been slow to excite post-listing.
Can Alpha IVF deliver? The observers said fertility is not just about hope - it's about timing and preparation.
"The same holds for markets. Alpha IVF has the expertise, branding and sector advantage. But to regain momentum, it must deliver stronger margins, healthier cash flow, and strategic clarity," one observer said.
Until then, it may continue to be the company that helps deliver babies, but not yet the financial results its shareholders were expecting, the observer added.
