Q&M Dental: Acquiring TP Dental, a multidisciplinary dental group in Singapore with 25 experienced dentists and 43 years of operating history, for $28.6m. Of this, $10.6m will be paid using new shares issued at $0.71 each. This is by far Q&M’s largest acquisition and Singapore’s largest dental group M&A.
Based on its profit guarantee, TP Dental could contribute at least $2m a year in earnings to Q&M. TP Dental registered a $1.9m net profit in 2013. Maybank-KE expects the latest acuqistion to provide a 9% uplift to Q&M’s FY16-17 earnings per share.
Overall, the house is maintaining its Buy call, but lifts its TP to $0.92 from $0.71, as it rolls over its 45x earnings multiple to FY16. This is 1SD above its 5-year mean to capture Q&M’s strong earnings growh trajectory, M&A record and scarcity value.
With $42m of cash untapped from its recent MTN, market watchers are expecting more acquisitions to come.
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