KGI Securities has started coverage on Q&M Dental : QC7 0%with an “outperform” recommendation and a 12-month target price of S$0.35.
In a report on Thursday (May 30), KGI analyst Tang Kai Jie attributed the positive rating to Q&M’s business resilience and stabilising margins as well as growth potential.
In his view, the private dental healthcare group is well-positioned for positive revenue growth and will be able to capture the majority of demand for dental services in the local market.
The assigned price target implies an upside of more than 44 per cent based on Q&M’s closing price on May 29. It accounts for a terminal growth rate of 2 per cent and a weighted average cost of capital of 8.3 per cent.
Tang also expects increased revenue per clinic as the group prioritises improving operational efficiency over expansion in the Singapore market, which consists of 106 dental clinics and five medical clinics.
A joint venture agreement between EM2AI and Q&M Dental, which will introduce more capital for investing in artificial intelligence capabilities, is also predicted to drive growth for the healthcare group.
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Such moves emphasise the need for “private dental companies to focus on organic growth, improving efficiency and cost savings in their dental business, to gain an edge in the already saturated private dental market”, Tang said.
The analyst expects Q&M Dental’s financials to “improve gradually after the normalisation of its business” post-pandemic.
Shares of Q&M Dental traded 2.1 per cent or S$0.005 lower at S$0.235, as at 3.29 pm on Thursday.
