Q&M Dental

Q&M Dental: Q&M signed a non-binding letter of intent with Baihe Stomatology Hospital to mutually cooperate in the following areas: i) Discuss clinical techniques, financial, business and legal issues that will help promote Baihe’s future development and expansion; ii) Explore models for exchanging knowledge of customer service excellence and management techniques; and iii) Provide a platform for conducting exchange programs to help further understand the market conditions in China and Singapore. We note that Q&M have been ramping up overseas presence in Asia, especially in China and Msia. The group aims to move upstream to be its own dental-product supplier, and downstream into dental distribution via M&A activity in China. Based on Maybank-KE's estimates, FY15E P/E will be reduced from 37.3x to as low as 27.1x. At the same time, FY15E EPS growth is expected to rise from 16.3% (organic growth only) to as high as 53.5%. With Aoxin in the bag, Q&M has proven that it is able to execute on its acquisition strategy, and with a string of deals to come, the stock is still attractive in the next 12 months.