Q&M Dental Group - Maybank Kim Eng 2021-11-15: Revert To Core; Stay Buy With Lower Target Price

Q & M DENTAL GROUP (S) LIMITED (SGX:QC7) | SGinvestors.io 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






Eric Ong Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-11-15
SGX Stock Analyst Report BUY MAINTAIN BUY 0.78 DOWN 0.850



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