Q&M Dental: The proposed spin-off of Aidite is drawing closer. The company indicated the spin-off will be completed on new third board in Beijing. CIMB thinks that the separate listing of Aidite could be completed as early as Q1-H16, with Aoxin’s spin-off to follow closely after.
CIMB’s base case scenario is Q&M paring dow nits stake in Adite to 30% and lists at 30x CY16 P/E. Dilution in Aidite’s earnings will amount to a 9-10% fall in FY16-17E core net profit upon spin-off, and a corresponding drop in TP to $0.75.
There are upside risks. If the spin off could fetch lofty valuations (Chinese peers trade at 58x forward earnings), this could offset the loss in earnings.
Meanwhile, there could be a possibility of a special dividend if vendor shares are sold at listing.
The house maintains Add with TP fo $0.84
No comments:
Post a Comment