Q&M Dental Group - CGS-CIMB Research 2022-11-14: Dental Core Revenue Growth Commendable

Q&M Dental Group - Dental Core Revenue Growth Commendable

  • Q&M Dental (SGX:QC7)’s 3Q22 core net profit of S$3.6m (+7% q-o-q, -62% y-o-y) was below our forecast of S$4.5m, with 9M22 net profit forming 70% of our and 65% of Bloomberg consensus FY22F forecasts. The miss was due to losses from Acumen and higher-than-expected finance costs (+71% y-o-y).
  • 3Q22 revenue of S$43m was in line with our expectations (-4% q-o-q, - 26% y-o-y), as Q&M Dental eked out 2% growth in dental core revenue while revenue from other businesses (i.e. Acumen) fell 98% y-o-y.
  • Q&M Dental opened five new dental clinics (4 in Singapore, 1 in Malaysia) in 3Q22, bringing the group’s total dental clinic count to 152 clinics (3Q21: 128). Q&M Dental has opened 16 new dental clinics year-to-date, and is expected to open two more clinics in 4Q22 to bring total new clinics for FY22F to 18, shy of its 30 new clinics target set previously. Nevertheless, we understand that the management is considering increasing dental chairs in existing outlets to serve its growth ambitions as leases for new locations increase.
  • We expect core dental revenue to remain seasonally strong in 4Q22F as employees utilise corporate/individual dental benefits before year-end expiry. We also expect some revenue recognition from Q&M Dental’s tender award to operate one of the Joint Testing and Vaccination Centre (JTVC), which commenced operations on 1 Oct 22.
  • We expect Q&M Dental's net profit to improve ~55% y-o-y in 4Q22F from lower staff costs as staff bonus for FY22 had been accrued since 2Q22 compared to FY21 when it was solely recognised in 4Q21.
  • We trim our FY22-24F EPS forecast for Q&M Dental by 4.7%-8.3% to reflect slower outlet expansion from 20 new dental clinics p.a. to 18 in FY22F and 15 apiece in FY23-24F, alongside higher finance costs.
  • Our target price for Q&M Dental is lifted marginally to S$0.45 as we roll forward our valuation to 20x FY24F P/E, based on 1 standard deviation below the group’s 5-year historical mean.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

TAY Wee Kuang CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-11-14
SGX Stock Analyst Report ADD MAINTAIN ADD 0.45 UP 0.440

Previous report by CGS-CIMB:
2022-10-12 Q&M Dental Group - Tender Win Alleviates Short-Term Pressure

Target prices by 3 other brokers at Q&M Dental Target Prices.
Listing of broker reports at Q&M Dental Analyst Report.

Relevant links:
Q&M Dental Share Price History,
Q&M Dental Announcements,
Q&M Dental Dividends & Corp Actions,
Q&M Dental News Articles


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