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With no teething issues, Q&M eyes M&A for further growth

Emelia Tan
Emelia Tan10/7/2021 11:03 AM GMT+08  • 7 min read
With no teething issues, Q&M eyes M&A for further growth
Get to know more about listed dental group, Q&M, here.
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1. What are the services provided by Q&M Dental?

Established in 1996 in Singapore, Q&M Dental Group is Singapore’s largest private dental healthcare group. It offers a comprehensive range of primary care dental services and specialist services.

Q&M, led by founder and CEO Dr Ng Chin Siau, owns the largest network of private dental outlets in Singapore, operating 87 dental outlets across the country. The services provided include dental care and medical care. The group also operates 37 dental clinics in Malaysia and one in China.

In 2019, Q&M ventured into the dental education market, providing graduate diploma courses for dentists in Singapore. In view of the global Covid-19 pandemic, the group has also expanded into the medical laboratories and research industry with the incorporation of Acumen Diagnostic for sales and distribution of Covid-19 test kits and provision of laboratory testing.

2. Could you elaborate on the group’s revenue and business model?

The group’s revenue comprises dental and medical clinics, and medical laboratory and dental equipment and supplies, with the dental core business contributing to 75% of the group’s revenue in the 2Q2021. We have a focus on organic growth and currently own 100% of clinic operations in Singapore.

3. What is Q&M’s competitive edge versus your peers?

Serving over 10% of the local population, the distinct brand of Q&M has been recognised and endorsed by various organisations. The group has more than 40,000 recurring patient visits per month, and more than 9,000 new customers each month.

We have over 240 qualified and experienced dentists, of which more than 50 are specialists or dentists who have undergone extensive post-graduate training either locally or from various established training institutions overseas. The large pool of qualified dentists allows the group to provide a comprehensive range of primary dental care services.

We also have over 300 well-trained nurses and supporting staff providing dentists and customers with efficient service.

4. What are some recent developments by the group?

We have made inroads in the development of advanced technology in healthcare with the establishment of EM2AI, which focuses on developing AI-powered solutions in diagnosis and treatment planning. Through the collaboration with International Medical University, the system aims to improve the quality and experience of patient treatment. It will be the first of its kind in Southeast Asia to be used in the dental healthcare landscape.

Training and education are an integral part of a dentist’s profession. Our Q&M College of Dentistry aims to provide a platform for dentists to upgrade their skills and learn best practices in dentistry, with our first batch of students graduating in the next few months. Moving forward, the college will also provide enhanced courses to dentists in Singapore.

Our subsidiary, Acumen Diagnostics, was granted a healthcare institution licence from the Ministry of Health (MOH) for the operation of a clinical laboratory for conducting SARS-CoV-2 PCR testing services for Covid-19 on Sept 14, 2020. The Acu-corona series of SARS CoV-2 RTPCR tests are already being used in other countries including Malaysia and Indonesia. Furthermore, Acumen was selected as one of the six successful awardees of the open tender exercise by the Health Promotion Board (HPB) for the provision of Covid-19 swab and testing services in May 2021.

5. How is Q&M’s revenue split across your key markets?

Through our associate company Aoxin Q&M, we have embarked on expanding in the northeastern part of China over the years, opening dental hospitals with more than 100 over dental chairs.

Although Aoxin has been loss-making in the last few years, due to Covid-19 and gestation losses from opening two new hospitals in Panjing and Daliang, improvements are being observed this year. The net loss for 1Q2021 is RMB4.7 million ($1 million); however, it has decreased to RMB1.5 million in 2Q2021. Barring unforeseen circumstances, the group is cautiously optimistic on the dental industry in China.

We are closely monitoring the Covid-19 situation in Malaysia and will evaluate the opening of new clinics until the vaccination rate increases and the rate of infection decreases.

6. Q&M recently declared a bonus for its shareholders. Could you share the rationale behind releasing the bonus and elaborate on this policy?

The proposed bonus issue increases the issued share capital base of the company, reflecting the growth and expansion of its business. It is also to reward and recognise shareholders for their loyalty and continuing support for the company. Management believes that it will increase the accessibility of investing in the company to more investors, thereby increasing trading liquidity and greater participation across various investors.

7. What are some notable developments that shareholders can look out for or expect in the near to medium term?

In Singapore, we have initiated a strategy of intensive organic growth in our dental clinics. We will expand our team of dentists to support the future growth of our operations in Singapore. To maintain our current position as the leading private dental healthcare group in Asia, we will continue to seek opportunities to venture into new markets in Asean countries.

We will continue to develop, invest and optimise our digital AI ethical enhanced guided treatment plan to provide the most effective and suitable treatment plans for patients. We believe that we are well-positioned to cater to the rising demand for primary and higher value specialist dental healthcare services to our customers.

Q&M will also focus on improving the efficiency and productivity of our Covid-19 testing capacity through automation as the nation moves towards endemic management. Q&M College of Dentistry has also provided courses for swabbing operation and equipping individuals with knowledge of proper infection control according to MOH’s protocol. We are also seeing new opportunities to further support the fight against Covid-19 through vaccination services.

8. Does Q&M have any plans in place to expand your reach in the existing markets?

We have added 10 new clinics to our network in this year-to-date. Aside from that, we have also secured locations to open six new dental clinics island-wide and are expected to commence operations by 4Q2021.

The group intends to open 30 dental clinics in Singapore and Malaysia each year after 2021. The eventual number of dental outlets will depend on available opportunities, pertinent market conditions and the evolving Covid-19 situation.

Our dentists and staff have supported the group during the challenging environment. We believe that any future expansion and growth in our core dental business will also leverage on this proven formula.

9. Sustainability and ESG have increasingly been a key focus. How is Q&M committed to sustainability?

Our formula for building a sustainable business is guided by our philosophy which focuses first on the continuous improvement of ourselves and our mindsets, and thereafter collectively aligning our Q&M family to one greater purpose — towards the goal of treating all patients well through dentistry.

Q&M emphasises on creating organic growth in Singapore and through overseas expansions, with responsible and ethical practices from both the clinicians and our staff. With that, we strive to provide better services for our patients.

10. Why should investors take a closer look at Q&M?

The group is pursuing organic growth through mergers and acquisitions in Southeast Asia and China, the setting up of new clinics in Malaysia and China, and strengthening our dentist recruitment programme.

Through AI in Dentistry, we aim to provide most effective treatment plans for patients and in return increase the group’s long-term value proposition.

We have new ventures such as the sale of Covid-19 test kits, laboratory tests, swabbing and the sale of masks and personal protective equipment.

Q&M Group has a dividend policy of at least 30% of our core operating profits. Management is also projecting healthy financial growth and has maintained a strong balance sheet and cash position.

Emelia Tan is a research analyst with the Singapore Exchange

Photo: Albert Chua/The Edge Singapore

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