Saturday, August 15, 2015

Aug[3] - Q&M (Buy, Ride with its ambition)

COUNTER: Q&M Dental Group

OVERVIEW:
Established in 1996 in Singapore, the counter started as single clinic with one dental surgeon. It has evolved into a well-known branded healthcare group comprising of more than 60 clinics located island-wide. With a pool of more than 180 dentist and 300 dental surgery assistant, it provides comprehensive range of primary care dental services as well as specialist services. The counter has business presence in Malaysia and People's Republic of China (PRC). On last June, it was awarded with 2015 Forbes Asia's "Best under A Billion" list.

HIGHLIGHTS:
(1) 2Q2015 results revenue leap by 51% to $30.52mil year on year. Net profit rose 212%  to $3.69mil. Such a higher earning was mainly contributed by new dental outlets in Singapore as well as the acquisition of Aoxin and Aidite in PRC last year. Aoxin is a dental healthcare group based on Shengyang, PRC with operation history more than 20 years. Aidite is a dental supplies manufacturer.

(2) The counter has raised $60mil from issuing 3 years bond last March. It boasted the cash and cash equivalents to $87mil by last June. It could be used to fund existing acquisition plans.

(3) The counter has a long list of undergoing expansion plan, such as proposed acquisition, joint ventures and strategic alliances in the regions, including Singapore, Malaysia and PRC.

INVESTMENT THEMES:
(1) Generally 4Q is the seasonally strong quarter for the counter. Investor could also expect stronger earning on 2H2015 once its acquisition plans is completed, especially buying of TP dental which could enhance its market share in premium market.

(2) Both CIMB and Maybank rated the counter above $0.90 which represent >20% of growing room from current trading price.

(3) From the chart, the counter has formed support ~ 0.715. Since its result announcement, the price is edging upwards. Immediate resistance is 0.88. Trader could take position for potential price gain.

ENTRY PRICE:
Buy < $0.8

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