Q&M

Q&M: Granted 2-year call option to Heritas Helios Investments (HHI), a healthcare private equity fund seeded by IMC Group, for the right to be granted 63m new shares for a minimum issue price of $0.48/share. In conjunction, Q&M has granted to unlock the moratorium on the sale of shares by controlling and substantial shareholders- Quan Min Holdings, Dr Koh Shunjie Kelvin and Dr Koh Shuhui Felicia, to sell an aggregate 10% of share capital in Q&M to HHI. The shareholders have agreed to extend their shareholders agreement by three years to 2021. HHI, managed by Heritas Capital Management and key sponsor, IMC Group, focuses on investments in the healthcare sector with an emphasis on growth and sustainability, and seeks value through partnerships within portfolio companies. The strategic partnership is expected to boost Q&M's presence in the region to achieve further growth in Singapore, Malaysia and China, as well as other new markets. China remains the key catalyst for Q&M, with acquisitions of Chinese dental players still ongoing. The five value-accretive acquisitions on its pipeline come with 10 years minimum profit guarantee, and are expected to start contributing to Q&M's financials from Apr 2014 onwards. The group's sound expansion strategy allows it to obtain instant penetration into the enormous fragmented Chinese market, a market with massive potential in the dental industry. The street expects Q&M to continue its acquisition spree in the country with more than 1,000 private dental hospitals. At $0.485, Q&M trades at 44.1x forward P/E. We do not rule out that visibility may expand for the counter, which currently has coverage from two brokers, both with Buy calls.