AOXIN Q & M DENTAL GRP LIMITED (SGX:1D4)
Aoxin Q&M Dental - Potential Unlocking Of Huge Value Via NASDAQ Listing Of Associated Company Acumen
- Aoxin Q&M (SGX:1D4)’s 49% associated company, Acumen, is exploring a listing on NASDAQ. Our base-case estimate using 22x 2021F P/E for Acumen, based on Q&M Dental Group (SGX:QC7)’s historical mean P/E, will unlock value of S$216m (S$0.42/share) for Aoxin Q&M.
- Compared to current market cap of Aoxin Q&M at S$127m (S$0.25/share), shareholders will enjoy more than 70% upside in value accretion upon successful of listing, with continued ownership of the China dental business.
- Maintain BUY and target price of S$0.37 (16x 2022F P/E).
Aoxin's 49% owned associated company is exploring a proposed listing on NASDAQ.
- On 17 Jan 22, Aoxin Q&M Dental announced that its 49% associated company, Acumen Diagnostics (Acumen) is exploring a proposed listing of its securities on the NASDAQ stock exchange in New York, USA. Furthermore, Acumen has appointed an advisors to assist with the listing evaluation and all relevant preparatory work including the selection of professional advisors and underwriting banks.
- Expects to reap many benefits from listing in one of the most prestigious platforms in the world. The reasons for choosing NASDAQ is because it is one of the most well-known listing platforms in the world. NASDAQ is known for its technology, innovation, and it is home to digital, biotechnology, and other cutting edge companies. In addition, Acumen believes that having a listing status in a leading global capital market of the status of NASDAQ is beneficial as this provides Acumen with ready access to the world's largest economy, an expanded investor base and additional sources of financing. The proposed NASDAQ listing is also an excellent opportunity for Acumen to enhance its corporate profile as it seeks to further expand its business.
- Our base-case estimate indicates unlocking of huge value with more than 70% upside. Our base-case estimate using 22x 2021F P/E for Acumen (S$20m estimated earnings for 2021F), based on Q&M Dental’s historical mean P/E, will unlock value of S$216m (S$0.42/share) for Aoxin Q&M. We believe our base-case estimate is relatively conservative vs Acumen’s peers that are trading at 27x 2021F P/E. Compared to current market cap of Aoxin Q&M at S$127m (S$0.25/share), shareholders will enjoy more than 70% upside in value accretion upon successful listing, with continued ownership of the China ur bear/base/bull case estimate is based on Q&M Dental’s 1 standard deviation /mean /+1 standard deviation historical P/E band.
Q&M Dental also stands to benefit with 40% upside.
- Similarly, Q&M Dental will also benefit from the successful listing of Acumen in NASDAQ given its 51% ownership in Acumen. Our base-case estimate indicates a 40% upside to current share price.
Maintain BUY call on Aoxin
- Maintain BUY call on Aoxin Q&M with target price of S$0.37, pegged to 16x 2022F P/E, based on a 20% discount to parent company, Q&M Dental’s historical mean P/E, due to a shorter profitable track record.
- We think the current valuation of 11x 2022F P/E for Aoxin Q&M is attractive, given its strong growth profile, potential expansion into the lucrative ART business and proven capabilities in the dental space in China. Peers are trading at 39x 2022F P/E.
- See
- Catalysts:
- Successful expansion into the ART business and new precision medicine products.
- Better-than-expected earnings and dividend.
- Successful listing of Acumen in NASDAQ.
- Risks include:
- Stringent lockdown measures due to resurgence of COVID-19,
- increased competition in dental service industry, and
- inability to attract and groom dental professionals.
John Cheong
UOB Kay Hian Research
|
https://research.uobkayhian.com/
2022-01-21
SGX Stock
Analyst Report
0.370
SAME
0.370
