Q&M Dental Group: Expansion Plans in Focus

CGS International | March 7, 2025

Regional Hospitals

Q&M Dental Group (QNM SP)

According to the report, Q&M Dental Group’s (QNM) FY24 core net profit of S\$17.3m was slightly ahead of expectations at 105.1% of the analyst’s forecast. This was due to higher profitability from cost control measures. QNM also announced a 2H24 DPS of 0.7 Scts, bringing FY24 DPS to 1.1 Scts, representing a 71% payout ratio alongside a 50m share buyback for FY25F. The analyst reiterated an “Add” rating with a higher target price of S\$0.43, as they rolled forward the valuations, now pegged at 20x FY26F P/E (0.5 s.d. below 6-year mean).

The report noted that QNM’s headline net profit of S\$4.8m (-21.9% yoy) for 2H24 included impairments of S\$6.0m, partly mitigated by compensation from ex-vendors. QNM also reclassified its business segments into (1) core dental business, which includes dental clinic operations, as well as distribution of dental supplies and equipment, and (2) other businesses, comprising non-core businesses, such as its laboratory testing unit Acumen and operations of medical clinics (non-dental). The analyst observed that QNM’s revenue from Malaysia (MY) operations grew 27.8% yoy in 2H24, making up c.8.2% of total revenue, while its Singapore (SG) operations revenue declined by 6.4% yoy.

The analyst believes that QNM’s expansion plan in SG likely entailed M&As of existing clinics rather than organic growth given the already high penetration of dental clinics, while MY could see a mixture of organic and inorganic expansion after QNM flagged up potential opportunities in Johor following the recent commitments by Malaysia and Singapore to develop the Johor-Singapore Special Economic Zone. QNM also identified China as a promising market for further expansion, and the analyst noted that QNM has an outstanding M&A pending definitive agreement for Guangdong Delun Medical Group that was announced in Oct 24.

The analyst raised their FY25-26F EPS by 3.9-7.2% after taking into account a more aggressive clinic expansion plan from FY25-26F and introduced their FY27F estimates. The target price was lifted to S\$0.43 after rolling over the valuation, pegged at 20x FY26F P/E, 0.5 s.d. below its 6-year mean (unchanged) as they continue to monitor the impact of its expansion plans on its profitability. The analyst reiterated an “Add” rating for potential earnings uplift arising from its expansion plans, with re-rating catalysts being continued improvements in hoh profitability, especially for its core dental business, as well as potential M&As which could have significant contributions to its profits. Downside risks include unfruitful expansion and poor integration of acquired clinics resulting in downward pressure on margins.

IHH Healthcare Bhd (IHH MK)

The report states that IHH Healthcare Bhd is rated “Hold” by the analyst, with a target price of RM7.75. The company has a market capitalization of RM14,463m and is trading at a P/E of 27.3x, 22.2x, and 20.4x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 36.0%, and the company has a recurring ROE of 7.6% and 8.8% for CY25F and CY26F, respectively. The EV/EBITDA is 13.2x and 11.4x for CY25F and CY26F, respectively, and the dividend yield is 1.1% and 1.4% for CY25F and CY26F, respectively.

Sunway Bhd (SWB MK)

The report states that Sunway Bhd is rated “Add” by the analyst, with a target price of RM5.80. The company has a market capitalization of RM6,422m and is trading at a P/E of 24.6x, 23.6x, and 22.4x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 4.7%, and the company has a recurring ROE of 7.5% for both CY25F and CY26F. The EV/EBITDA is 19.0x and 16.9x for CY25F and CY26F, respectively, and the dividend yield is 1.8% and 2.0% for CY25F and CY26F, respectively.

KPJ Healthcare (KPJ MK)

The report states that KPJ Healthcare is rated “Add” by the analyst, with a target price of RM3.35. The company has a market capitalization of RM2,722m and is trading at a P/E of 31.7x, 28.4x, and 26.2x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 10.1%, and the company has a recurring ROE of 14.4% and 15.1% for CY25F and CY26F, respectively. The EV/EBITDA is 11.9x and 11.0x for CY25F and CY26F, respectively, and the dividend yield is 1.7% and 1.8% for CY25F and CY26F, respectively.

TMC Life Sciences Bhd (TMCL MK)

The report states that TMC Life Sciences Bhd is not rated by the analyst.

Mitra Keluarga Karyasehat (MIKA IJ)

The report states that Mitra Keluarga Karyasehat is rated “Hold” by the analyst, with a target price of IDR2,600. The company has a market capitalization of IDR2,102m and is trading at a P/E of 29.2x and 26.4x for CY25F and CY26F, respectively. The company has a recurring ROE of 17.7% and 17.8% for CY25F and CY26F, respectively. The EV/EBITDA is 18.7x and 16.7x for CY25F and CY26F, respectively, and the dividend yield is 1.6% and 1.8% for CY25F and CY26F, respectively.

Siloam International Hospitals (SILO IJ)

The report states that Siloam International Hospitals is rated “Hold” by the analyst, with a target price of IDR2,850. The company has a market capitalization of IDR2,070m and is trading at a P/E of 22.1x and 19.1x for CY25F and CY26F, respectively. The company has a recurring ROE of 16.4% and 16.6% for CY25F and CY26F, respectively. The EV/EBITDA is 9.3x and 8.1x for CY25F and CY26F, respectively, and the dividend yield is 0.8% and 1.1% for CY25F and CY26F, respectively.

Medikaloka Hermina (HEAL IJ)

The report states that Medikaloka Hermina is rated “Hold” by the analyst, with a target price of IDR1,330. The company has a market capitalization of IDR1,246m and is trading at a P/E of 31.9x and 28.4x for CY25F and CY26F, respectively. The company has a recurring ROE of 13.5% and 13.7% for CY25F and CY26F, respectively. The EV/EBITDA is 11.7x and 10.7x for CY25F and CY26F, respectively, and the dividend yield is 0.7% and 0.8% for CY25F and CY26F, respectively.

Raffles Medical Group (RFMD SP)

The report states that Raffles Medical Group is rated “Add” by the analyst, with a target price of S\$1.20. The company has a market capitalization of S\$1,385m and is trading at a P/E of 25.7x, 23.4x, and 21.1x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 10.5%, and the company has a recurring ROE of 6.5% and 6.8% for CY25F and CY26F, respectively. The EV/EBITDA is 11.9x and 10.4x for CY25F and CY26F, respectively, and the dividend yield is 2.1% and 2.2% for CY25F and CY26F, respectively.

Thomson Medical Group Ltd (TMG SP)

The report states that Thomson Medical Group Ltd is not rated by the analyst.

Bangkok Dusit Med Service (BDMS TB)

The report states that Bangkok Dusit Med Service is rated “Add” by the analyst, with a target price of THB34.00. The company has a market capitalization of THB10,981m and is trading at a P/E of 22.3x and 21.2x for CY25F and CY26F, respectively. The 3-year EPS CAGR is 7.2%, and the company has a recurring ROE of 16.1% and 16.6% for CY25F and CY26F, respectively. The EV/EBITDA is 14.5x and 13.8x for CY25F and CY26F, respectively, and the dividend yield is 3.4% and 3.9% for CY25F and CY26F, respectively.

Bumrungrad Hospital (BH TB)

The report states that Bumrungrad Hospital is rated “Add” by the analyst, with a target price of THB226.00. The company has a market capitalization of THB4,197m and is trading at a P/E of 19.4x, 18.8x, and 19.7x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 6.0%, and the company has a recurring ROE of 24.5% and 22.5% for CY25F and CY26F, respectively. The EV/EBITDA is 12.3x and 11.7x for CY25F and CY26F, respectively, and the dividend yield is 2.8% and 2.9% for CY25F and CY26F, respectively.

Bangkok Chain Hospital (BCH TB)

The report states that Bangkok Chain Hospital is rated “Hold” by the analyst, with a target price of THB16.50. The company has a market capitalization of THB1,139m and is trading at a P/E of 23.6x, 21.0x, and 17.4x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 18.2%, and the company has a recurring ROE of 12.1% and 12.9% for CY25F and CY26F, respectively. The EV/EBITDA is 11.6x and 10.6x for CY25F and CY26F, respectively, and the dividend yield is 2.1% and 2.4% for CY25F and CY26F, respectively.

Ramkhamhaeng Hospital (RAM TB)

The report states that Ramkhamhaeng Hospital is rated “Hold” by the analyst, with a target price of THB18.50. The company has a market capitalization of THB680m and is trading at a P/E of 18.8x, 15.8x, and 18.9x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 31.0%, and the company has a recurring ROE of 6.5% and 7.6% for CY25F and CY26F, respectively. The EV/EBITDA is 9.6x and 8.9x for CY25F and CY26F, respectively, and the dividend yield is 4.0% for both CY25F and CY26F.

Chularat Hospital (CHG TB)

The report states that Chularat Hospital is rated “Add” by the analyst, with a target price of THB2.80. The company has a market capitalization of THB679m and is trading at a P/E of 20.0x, 17.2x, and 14.5x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 17.7%, and the company has a recurring ROE of 15.1% and 17.7% for CY25F and CY26F, respectively. The EV/EBITDA is 12.6x and 11.1x for CY25F and CY26F, respectively, and the dividend yield is 3.9% and 4.5% for CY25F and CY26F, respectively.

Praram 9 Hospital (PR9 TB)

The report states that Praram 9 Hospital is rated “Add” by the analyst, with a target price of THB29.00. The company has a market capitalization of THB520m and is trading at a P/E of 21.8x, 19.8x, and 17.9x for CY25F, CY26F, and CY27F, respectively. The 3-year EPS CAGR is 12.5%, and the company has a recurring ROE of 14.1% and 14.4% for CY25F and CY26F, respectively. The EV/EBITDA is 11.2x and 10.1x for CY25F and CY26F, respectively, and the dividend yield is 2.1% and 2.3% for CY25F and CY26F, respectively.

Regional Pharmaceuticals

Duopharma Biotech Bhd (DBB MK)

The report states that Duopharma Biotech Bhd is rated “Add” by the analyst, with a target price of RM1.55. The company has a market capitalization of RM263m and is trading at a P/E of 13.2x and 11.7x for CY25F and CY26F, respectively. The company has a recurring ROE of 11.7% and 12.3% for CY25F and CY26F, respectively. The EV/EBITDA is 8.0x and 7.4x for CY25F and CY26F, respectively, and the dividend yield is 3.0% and 3.4% for CY25F and CY26F, respectively.

Kotra Industries Bhd (KTRI MK)

The report states that Kotra Industries Bhd is not rated by the analyst.

Apex Healthcare Bhd (APEX MK)

The report states that Apex Healthcare Bhd is not rated by the analyst.

Pharmaniaga Bhd (PHRM MK)

The report states that Pharmaniaga Bhd is not rated by the analyst.

YSP Southeast Asia Holdings