Q&M provided two overnight updates. Firstly, it has successfully registered the dental zirconium oxide ceramics blocks manufactured by Aidite, and will begin marketing it in Singapore.
Separately, regarding the spin-off listing of Aidite in PRC, Q&M will embark on a series of restructuring steps, including a placement, with the founders of Aidite. Resultant Q&M’s stake in Aidite will be diluted to 51% of enlarged share base, from 100%.
These steps include:
1) Capital reduction exercise – Reducing Aidite’s equity capital to Rmb23.97m from Rmb47m
2) Cancellation consideration – A payment of Rmb28.8m aggregate to the founders, as compensation of options cancelled, and tax risks the vendor may incur as share holders
3) Placement – the founders will subscribe to a 49% stake in Aidite, for a total of Rmb23m
Further details will be made known via a circular in due course.
Q&M had recently chalked up 9M15 earnings of 84%, and appears in line to meet full year expectations. Malaysia and China are two markets where the dental network seeks to grow both organically and via acquisitions.
Q&M is currently trading at 51x FY15e P/E, but narrows to 31.3x in FY16e.
At latest, Maybank-KE has a Buy call on Q&M with a TP of $0.97.