Last month, Alpha IVF Group Berhad (ALPHA, 0303) reported an impressive quarterly performance, prompting a slight uptick in its stock price. However, following the end of the Chinese New Year holiday, the stock price has been consolidating within the RM0.31 to RM0.32 range. What could be the underlying reasons for this stagnation? Could external factors be at play? Let’s start by diving into ALPHA’s fundamentals for a closer look.

Currently, ALPHA operates three in-vitro fertilization (IVF) centers in Malaysia and has a branch in Singapore. Having successfully established itself in these markets, the company is now accelerating its expansion across Asia, setting up new IVF centers in China, the Philippines, and Indonesia. These three countries have been strategic expansion targets due to their highly overlapping patient demographics with ALPHA’s existing key international clientele.

Data shows that in FY2024, 60.3% of ALPHA Malaysia’s revenue was derived from foreign patients, with the majority coming from Indonesia, China, and Singapore.

In September 2024, ALPHA established its first representative office in Shanghai, China, and partnered with a renowned local obstetrics and gynecology hospital to facilitate Chinese patients traveling to Malaysia for treatment. Due to licensing restrictions on preimplantation genetic testing (PGT) in China, ALPHA currently has no plans to set up an IVF center or satellite clinic there. Instead, the company directly engages with patients via its Shanghai office, assisting them in accessing IVF services in Malaysia.

In the same month, ALPHA opened an IVF center in Metro Manila, Philippines, and successfully recruited two experienced IVF specialists to provide professional reproductive medical services to local patients.

Following this, in October 2024, ALPHA announced its entry into the Indonesian market, where it plans to establish a full-scale reproductive center offering a comprehensive range of assisted reproductive services (ARS), including IVF, egg/sperm/embryo cryopreservation, and more. Additionally, the company has plans to open four satellite clinics across Indonesia, with the first clinic set to launch in Jakarta and expected to be operational by FY2026.

Dr. Lee projects that from FY2026 onwards, the new centers in Indonesia, China, and the Philippines will begin contributing revenue to the company, maintaining steady growth in the coming years. He further anticipates that within five years, revenue from ALPHA’s overseas operations could surpass that of Malaysia and Singapore, making international expansion a key growth driver for the company.

Shifting focus to ALPHA’s financial performance in the first half of FY2025. From May 1 to November 31, 2024, ALPHA recorded a total revenue of approximately RM86.2 million, with a net profit of RM29.9 million. Notably, the company has consistently maintained a net profit margin of over 30.0%, suggesting that it is well-positioned to outperform its FY2024 results.

Moreover, ALPHA’s return on equity* (ROE) stands at approximately 29.0%, significantly exceeding the industry average of 13.0%. This highlights ALPHA’s superior capital efficiency and its ability to generate sustainable returns for shareholders.

*Return on Equity (ROE) = Net Profit (from continuing operations) ÷ Shareholders’ Equity

According to Bloomberg, analysts project ALPHA’s net profit to reach RM65.9 million in FY2025, with a further increase to RM73.0 million in FY2026, underscoring its robust growth trajectory.

Despite ALPHA’s outstanding financial performance and solid fundamentals, why hasn’t its stock price experienced an upward trend?

I believe this is primarily due to the continued capital outflows from the Malaysian stock market and the external impact of U.S. President Donald Trump’s tariff policies, both of which have led to a generally weak market sentiment.

However, in such a market environment, selecting high-quality stocks becomes even more crucial. Companies like ALPHA, with strong fundamentals and a clear growth strategy, deserve closer attention from investors.

Given its expansion efforts, strong financials, and promising outlook, do you share the anticipation for ALPHA’s future growth and performance, dear readers?