Q&M Dental Group - Maybank Research 2023-03-08: 4Q22 Below Expectation; Awaiting Recovery

• We recently attended Q&M Dental Group (SGX:QC7)’s post-results briefing.
• To recap, Q&M Dental reported a headline net loss of S$2.2m in 4Q22, which was below our and market expectations. The variance was largely due to decrease in PCR testing revenue, as well as write-off of about S$5m relating to its COVID-19 related consumables.
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• We cut our FY23-24E earnings per share (EPS) foreacast for Q&M Dental by 15- 16% on slower-than-expected dental business growth and higher opex. Maintain HOLD with a lower target price of S$0.37, based on 22x FY23E P/E.

Room for margins to improve in existing outlets

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• Amid the current inflationary environment, Q&M Dental faces headwinds such as increased manpower and occupancy costs, as well as a shortage of trained nurses.
• Q&M Dental's management articulated that it will now focus on improving the utilisation and productivity of existing clinics (for eg, adding more dental chairs) to expand margins instead of network expansion going forward.

Investment in data-centric AI treatment

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Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://www.ketrade.com.sg/.