I believe the ASX small-cap share Monash IVF Group Ltd (ASX: MVF) has a lot of return potential.
As its name suggests, it is one of the largest assisted reproduction businesses in Australia. It also has operations related to women's imaging, day hospitals, and international assisted reproduction (in Malaysia, Singapore, and Indonesia (Bali)).
The Monash IVF share price has fallen by nearly 17% over the past year, as the chart below shows. However, the investment case looks appealing to me, so this could be the right time to invest.
Broad volume growth
We want to invest in businesses that are heading in the right direction. A few months ago, at the company's 2024 annual general meeting, it revealed how its segments had performed in the financial year ending October 2024.
The Australian assisted reproduction segment saw Monash IVF stimulated cycles increase by 2.6% year over year, including the Fertility North acquisition.
In the women's imaging segment, scan volumes were up 1.7% in FY25 up to October 2024.
International stimulated cycles to October 2024 had increased by 20% year over year, with KL Fertility cycles growing by 21% and Singapore cycles rising by 42%. The Singapore new expanded clinic commenced construction in early FY25 and was completed in late November 2024.
I believe achieving this growth despite the challenging wider economic conditions is a positive sign.
Long-term growth trends
The company says the industry and its own volumes "will continue to benefit from evolving underlying structural demand drivers, particularly from emerging services such as genetics, donor and egg freezing."
Monash IVF also said that advanced maternal age and growing patient segments, such as the LGBTQIA+ community, "will continue to drive growth in industry activity".
The ASX small-cap share expects its FY25 half-year result to show underlying net profit after tax (NPAT) of between $15.5 million and $16 million, compared to $15 million in the prior corresponding period. That represents growth of between 3.3% and 6.6% year over year.
With inflation coming down in Australia, the pressure the company is feeling on its cost base could be reduced in the medium term, which could help its margins rise in the coming years.
Appealing investor metrics
Considering the healthcare (and defensive) nature of this company's work and the fact that volumes and profits are growing, I think the ASX small-cap share looks appealing at the current valuation.
According to the forecasts on Commsec, the Monash IVF share price is valued at less than 15x FY25's estimated earnings, with a possible grossed-up dividend yield of approximately 7.25%, including franking credits.
