Q & M DENTAL GROUP (S) LIMITED (SGX:QC7)
Q&M Dental Group - A Reason To Smile
Strong 1Q21 well on track; BUY
- Q&M Dental Group (SGX:QC7)'s 1Q21 headline net profit soared 618% y-o-y to S$9.4m, partly boosted by disposal gains of S$4.3m from sale of its remaining 12.2% stake in Aidite. Excluding the one-off items, core earnings jumped by 198% to S$6.8m on total revenue of S$43.8m (+47% y-o-y), largely in line with MKE/consensus expectations.
- Post results briefing, we stay positive on Q&M Dental Group on the back of robust organic growth with upside potential from better-than-expected testing business (versus our profit assumption of S$8m or 25.8% of underlying PATMI).
Good showing from core dental business
- Turnover from dental/medical clinics rose 41% y-o-y to S$39.2m, mainly due to higher contribution from its existing outlets in Singapore. As at end- April, the Group has set up three new clinics in Singapore (Tampines Hub, Compassvale Crescent, and Orchard Central) and another two in Malaysia (Semenyih and Seremban).
- Meanwhile, it has also secured leases for three new dental outlets locally (Bedok Reservoir, Jurong Yuhua, and Canberra), which are expected to commence operations later this year. Q&M Dental Group targets to open 10 new clinics in Singapore by 1H21 (+12% from 83 outlets in FY20).
Govt aggressively ramping up COVID-19 tests
- Q&M Dental Group’s 51%-owned Acumen Diagnostics made its maiden contribution to bottomline in 1Q21, and is expected to grow for the rest of the year. According to MOH, the average daily number of swab tests over the past week has risen sharply to 76,400 (from ~34,600 in early Apr) given the recent spike of unlinked COVID-19 community cases.
- Moving forward, it will continue to ramp up this business via automation to improve efficiency and productivity to cater for higher number of swab tests conducted by the government, as well as expanding its in-house laboratory testing to include serology test.
Dental services not impacted by latest restrictions
- With net proceeds of S$17m received from the disposal of Aidite, Q&M Dental Group has declared its first interim dividend of 1.0 cents (1Q20: NIL). As dental services are not affected by the latest tightening of COVID-19 measures, we leave our EPS estimates and target price of S$0.87 intact, still pegged at 22x FY21e P/E or 15% discount to its bigger listed peers.
- Maintain BUY on Q&M Dental Group.
- See
Eric Ong
Maybank Kim Eng Research
|
https://www.maybank-ke.com.sg/
2021-05-18
SGX Stock
Analyst Report
0.870
SAME
0.870
