Q&M Dental

Q&M Dental: made two announcements this morning In Singapore, Q&M has exercised an option to buy three adjoining HDB shop units at Block 130 Jurong Gateway Road from UOB for $12.15m (below the current market value of $13m). Q&M plans to open a dental centre here - its fifth in Singapore. The dental centres tend to be more profitable than its standalone dental clinics because they can undertake complex dental procedures that deliver higher margins. Depending on the location, a dental centre can achieve breakeven in six to twelve months. In Malaysia, Q&M has agreed to buy a 70% stake in Ng GK Dental Surgery (Melaka) for ~$0.2m. This is a small deal, but is part of the company’s strategy to expand its reach in Malaysia. The announcements are in line with Maybank-KE’s current forecast for four additional dental outlets in S’pore and three in M’sia for FY14e. The house likes Q&M's highly scalable dental business and anticipate strong earnings growth in view of the short breakeven periods its new outlets require. Maintain BUY and TP $0.48