11 August 2014

Q&M Quarterly Report Summary - August 2014




Current Performance Review:

Revenue: S$36.2 million, up 18% mainly due to the expansion in the network of new dental and medical outlets and an increase in revenue from existing dental and medical clinics in Singapore.

EPS: 0.44 cents (diluted basis), up 33%

NAV: 7.4 cents, down from 7.6 cents due to large base of total outstanding shares

Expected ROE: 10% - 15%




Future Plans:

  • Expansion of network of dental clinics in Singapore: from current 56 dental outlets increase to 60 outlets by 2015. 
  • Expansion into private dental healthcare market in Malaysia: from current 9 dental outlets increase to 15 dental outlets by 2015. 
  • Expansion into private dental healthcare market in the PRC: to seek opportunities in acquisition of larger dental institutions. 
  • Expansion through acquisitions, joint ventures and/or strategic alliances that can create synergies with existing business in Singapore, Malaysia and PRC. 

DPS

Proposed DPS: 0.41 cents, Record Date: 22 August 2014, Payable Date: 3 September 2014

My Notes

As the company is facing a mature market in Singapore, its expansion strategy now is to venture into Malaysia and China. We have also seen quite a few acquisition since few years ago. It is a good sign for the group to grow its business oversea, especially in China.

The key risk here is the familiarity of doing business oversea and cash flow from operating is not sufficient to be used in investing. It may increase the possibility of company to raise additional fund via right issue / shares placement / bank loans that may increase Equity required rate of return.

Nonetheless, if EPS and cash flow from operating can improve over the long run, it proves that the company is doing a good job to create long term value to the shareholders.


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