- Maintain Accumulate with higher TP of S$0.96
- Q&M to buy three dental clinics in China for Rmb12.2 mn (~S$2.6 mn) in cash
- Substantial shareholders sold 46 mn shares at S$0.815 apiece via a vendor sale
- Partial lift of moratorium for four shareholders to enable participation in vendor sale
What happened?
- Three more dental clinics in Liaoning – Q&M’s 60%-owned subsidiary has agreed to acquire 60% stakes in three dental clinics in Panjin City (2) and Gaizhou City (1) in Liaoning Province, China. Q&M’s effective stake is 36%. Rmb5.7 mn from the deal will be injected into the three clinics. This is earmarked for expansion purposes.
- Purchase consideration: Rmb12.2mn in cash (~S$2.6 mn). We estimate ~S$1.5 mn will come from Q&M’s Medium-Term Note programme.
- Service agreement: Key dentists have each signed 12-year service agreement.
- Profit guarantee: Total profit guarantee of Rmb24.7 mn over a 12-year period. Q&M’s subsidiary will receive dividends of not less than Rmb14.8 mn.
- Vendor sale of 46 mn shares at S$0.815 each – Q&M’s substantial shareholders – Quan Min Holdings Pte Ltd and Heritas Helios Investments Pte Ltd, together with four other shareholders sold 46 mn shares at S$0.815 apiece. The sale was done to multiple investors. The six shareholders held ~72% of the total outstanding shares. The sale represents ~8.2% of their shareholdings in Q&M.
- Partial lift of moratorium for four shareholders – Q&M granted a partial lift of moratorium for four shareholders: Dr. Kelvin Koh, Dr. Felicia Koh, Health Field Enterprises Ltd and Dr. Foo Mooh Tong. This enabled them to join in the vendor sale.
- Letter of intent to run a hospital and dental education arm in China – Q&M has entered into a non-binding letter of intent to run the Stomatology faculty arm of the Medical department in Liaoning Medical University (LMU) and LMU affiliated hospital No. 2. The faculty accepts 60 new students every year. The hospital houses 48 dentists and more than 100 dental chairs. The hospital’s revenue was ~Rmb27 mn in FY14.
Source: http://www.poems.com.sg/
