Q&M

Q&M: two recently-completed acquisitions of Aoxin and Aidite have catapulted it to the major league of China’s private dental industry. It now owns three dental hospitals, three dental clinics and the second-largest dental zirconium producer in China. Some 17%/31%/31% of FY14/15/16e profits may come from China, with more to come as it expands via more acquisitions and organic growth. Private healthcare, including dental, has considerable growth prospects in China, thanks to: 1) Government encouragement of private-sector involvement as part of healthcare reforms 2) A low penetration rate 3) Growing affluence which should lift demand for higher-value services. Meanwhile in Singapore, growth should be underpinned by: 1) Opening of new dental outlets 2) Potential acquisition of stand-alone dental practices 3) Narrowing medical clinic losses 4) Government subsidies for private dental treatments Nevertheless, Singapore’s importance should decrease as China’s growth takes center-stage. Maybank-KE maintains Buy with TP of $0.50, based on 39x fully-diluted FY15e.