Company update: Q&M Dental Group Ltd.
Company Update: 21 August 2024
Opening up more room for growth
Looking at further expansion. Q & M Dental Group, in its financial results announcement, revealed plans to explore strategic growth opportunities in Singapore and other Asia-Pacific markets. This decision follows a year of business process streamlining that has led to improved profitability, suggesting the company is well-positioned for its next phase of growth.
Improving profitability.
The company experienced a significant increase in its net profit margin (NPM), which rose to 11.5% in the first half of 2024, up from 6.6% in the same period of 2023. Several expense categories remained flat or decreased year-over-year, highlighting the company’s successful efforts to streamline business processes and enhance operations organically. We anticipate this improved efficiency to persist throughout the remainder of the year.
1H24 Interim dividend.
The Group announced an interim dividend of 0.40 Singapore cents per share for 1H24, to be paid on 2 September 2024, representing a 150% increase YoY and a dividend payout ratio of 39%.
Valuation & Action
We maintain an OUTPERFORM recommendation and keep our TP unchanged at S$0.35, based on a financial analysis using discounted Cash Flow (DCF), with a terminal growth rate of 2% and a WACC of 8.3%.
Risks
The company is exposed to currency translation risk as it operates its business in several key markets such as Singapore, Malaysia, and China.
