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ALP STOCK INVESTMENT CLUB (20july2015)
July 20 close: S$0.7650
Target price: S$1.10
1.) Sector: Healthcare
2.) Core business structure: In Singapore, the Group had a total of 60 dental outlets, 1 mobile dental clinic, 3 medical outlets, 1 aesthetic centre and 2 specialist medical clinics in operation. Overseas, the Group had a total of 8 dental outlets in Malaysia, and 3 dental hospitals and 4 dental outlets in China. The group has three core business segments, one is primary healthcare, second Dental equipment & supplies distribution and the last is Dental supplies manufacturing.
3.) Segment that generates the highest revenue: Primary healthcare contributes 84% , Dental equipment & supplies distribution contributes 9.3%while the latter contributes 6.7% of the group total revenue respectively.
4.) Countries that the business operates: Singapore, china, Malaysia.
5.) Challenges: Dental healthcare has reached a point of saturation in singapore.
6.) Strengths : Demand for healthcare will be high due to ageing population in Singapore. Being the world’s largest population and the growing affluence in China, demand for healthcare would definitely rise in the years ahead.
7.) Significant events: With China as a key pillar in Q & M’s expansion strategy, the Group is targeting acquisitions, joint ventures and strategic alliances with established dental healthcare providers and other related businesses such as dental materials manufacturers. Purposefully, the Group has acquired a 51% shareholding in dental materials manufacturer, Qinhuangdao Aidite High Technical Ceramic Co., Ltd. (“Aidite”), and a 60% shareholding in dental group, Aoxin Stomatology Group (“Aoxin”).
8.) GTI Ranking: 326
10.) Recommendation: Buy. Strong growth in revenue and operating cash flow signals that the environment in which the group expand their operations is favourable. An ageing population is Singapore (biggest market) bode well for the group future performance.
COMPILED BY: Jun Wei
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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