SINGAPORE (Sept 6): Maybank Kim Eng has maintained its “buy” rating for Q&M Dental Group and its target price of $1.08 as the dental and medical clinic operator acquired three new dental clinics over the weekend.

On Saturday, Q&M acquired Singapore-based Ho Dental Surgery from Ho Chuk Ping and includes a dental clinic in Marine Terrace, along with two dentists. Separately, the group also acquired Tooffy from Ang Hooi Kia, who will relocate to Q&M’s subsidiary, TP Dental outlet on Orchard Road. On Monday, the group acquired Jurong Point Dental Surgery from Chong Yoke Mun.

Maybank Kim Eng’s John Cheong observed that the acquisitions were priced between seven and eight times earnings, and will provide the group with between 5 and 8 years of guaranteed profit amounting to $400,000 per annum.

However, he added that the cheap valuations were not the only benefit for the group, as Q&M stands to benefit from the new clinic locations, an enlarged customer base, and an uptick in profitability from improvements made to the existing dental operations.

“From its improving M&A track record and market leadership position, we expect more dentists to knock on Q&M’s door,” wrote Cheong in a note on Tuesday.

Q&M currently has a 7% market share of the total number of dental clinics in the country, despite its position as the market leader.

Furthermore, the group remains on the lookout for more expansion opportunities, even as its proposed acquisition of Shenzhen New Perfect dental laboratory group is undergoing a due diligence process.

The group’s share price might also continue to respond positively to its proposed spin off of its two Chinese subsidiaries, which are targeted to complete by year end, adds Cheong.

Shares of Q&M are currently trading at 73.5 cents.