Q&M Dental

Q&M Dental: Maybank-KE initiates Coverage with Buy Call and $0.41 TP. House note that Q&M is the rarest gem in the global dental sector – the best-performing by margins, ROE and growth in a sector where only four listed peers can be found but the cheapest. At 34x FY14F forecast, believe it is still undervalued now ahead of organic profits from new dental outlets in its 3 key markets and new revenue stream from medical clinics in Singapore. Q&M has proposed to acquire two dental groups in China, its largest acquisitions to-date. If completed, expect it to boost FY14 earnings and target price by 39%. Dental businesses in China have shown far more earnings growth and margin potential. Q&M has plans to unlock the value of its China operations via an IPO in future, but already private equity firms have sniffed the investment potential. Kunwu Jiuding’s proposed purchase of a 20% stake for RMB200m places a value of RMB1b ($200m) on Q&M’s China operation, higher than Q&M’s entire market cap in Singapore.