Q & M DENTAL GROUP (S) LIMITED (SGX:QC7)
Q&M Dental Group - Revert To Core; Stay Buy With Lower Target Price
Q&M's 3Q21 net profit in line
- Q&M Dental (SGX:QC7)’s 3Q21 net profit of S$9.5m (+68.7% y-o-y; +13.5% q-o-q) was largely in line with MKE and street’s expectations. This took 9M21 earnings to S$27.3m (+98.3% y-o-y) and achieved ~78% of our full-year estimate.
- Q&M Dental Group declared a third dividend of S$0.01 (9M21: S$0.03), translating into an attractive yield of 6.9%. Maintain BUY with a lower target price based on 22x FY22E P/E, which implies ~15% discount to its peers.
Trimming FY22/23E EPS on lower PCR testing
- Q&M Dental Group's 3Q21 revenue rose 47.6% y-o-y to S$57.7m, driven by higher turnover in core dental segment (+5.4% y-o-y), as well as contribution from COVID-19 test kits and testing by Acumen Diagnostics.
- As PCR tests will now be reserved mainly for people who are unwell, we are cutting our testing revenue forecast by ~65% for FY22 (see Fig5 in report attached below for our new assumptions). As a result, our FY22/23 EPS estimates will also be trimmed by about 7- 10%, though partially cushioned by still robust dental business.
Outlet expansion to drive growth
- Q&M Dental Group opened 3 clinics in Canberra, Bedok Reservoir and IMM shopping centre in 3Q21. According to management, it is on track to establish 9 new clinics in Singapore by the end of the year.
- In Malaysia, it has set up 3 outlets year-to-date and has identified locations to open another 2 in Selangor and Johor by end-2021. With the easing restrictions, we believe Q&M Dental Group is well positioned to cater to the pent-up demand for primary and higher value specialist and/or elective dental services to its patients.
Rolling out pipeline of new tests
- To mitigate the fall in COVID-19 swab conservative, we have not factored in any contributions from these initiatives in our forecasts until we get more visibility on the timing, etc. If successful, this could present some upside potential to our EPS estimates.
- See
Eric Ong
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-11-15
SGX Stock
Analyst Report
0.78
DOWN
0.850
