CIMB initiates Q&M Dental (JW8.SG) at Buy with a $0.83 SOTP-based target price. “Q&M offers investors value at 15X CY12 P/E (cheaper than peers) against our 3-year core earnings CAGR forecast of 30%. We like it for its strong recurring earnings in the domestic market and international expansion plans.” 

It says catalysts could include the opening of more clinics, higher charges, expansion through M&A, JVs and/or strategic alliances and a potential listing of its overseas dental business. 

 

It notes, dentistry has one of the most lucrative revenue intensity in healthcare business, dental expenditure is necessary, and dental charges are not the lowest of all healthcare consumption. 

 

“Q&M is in a sweet spot with 37 clinics and two Dental Centres island-wide to tap the population’s dentistry needs, while its two Dental Centres yield higher revenue intensity.” 

 

Shares are +4.7% at $0.560.