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Analysts lower Q& M' s TP after its 4QFY2022 results performed below expectations
Analysts have all lowered their target price estimates for Q& M Dental Group QC7 0.00% after the group&rsquo s 4QFY2022 loss stood below their estimates. Q& M Dental, on March 2, reported a loss of $2.2 million for the quarter ended Dec 31, 2022. For the FY2022, the group&rsquo s earnings fell by 63% y-o-y to $11.3 million.
CGS-CIMB Research analysts Tay Wee Kuang and Kenneth Tan have lowered their target price to 42 cents from 45 cents previously as Q& M&rsquo s net loss during the 4QFY2022 missed their estimates. The group&rsquo s core net profit of $2.9 million for the quarter, which brought its FY2022 core net profit to $16.5 million, also stood lower than Tay and Tan&rsquo s expectations at 90.0% of their full-year estimates.
In their report dated March 9, Tay and Tan note that the group will be initiating &ldquo a strategy of intensive organic growth&rdquo by expanding its team of dentists.
&ldquo [This is] likely to optimise operations in existing dental clinics as Q& M&rsquo s FY2022 revenue growth of 2% y-o-y did not match its pace of clinic openings,&rdquo they write.
&ldquo In FY2022, Q& M opened 16 dental clinics across Singapore and Malaysia to bring total dental and medical clinics to 157 outlets from 141 outlets a year ago. We understand that the shortage of nurses also impacted operations during FY2022, but Q& M shared that it has since been able to recruit additional nurses,&rdquo they add.
That said, Tay and Tan are less upbeat on the group&rsquo s non-core businesses as they anticipate losses to extend into the FY2023.
&ldquo [This is] as Q& M ramps up the development of EM2AI for future commercialisation, offset by higher contribution from Acumen, due to its management of a Joint Vaccination and Testing Centre (JVTC) till end-FY2023 while rolling out new diagnostic tests,&rdquo they write.
Following this, the analysts have also cut their earnings per share (EPS) estimates for the FY2023 and FY2024 by 3.2% and 7.3% respectively, which led to the lowered target price.
That said, Tay and Tan are still remaining upbeat with their &ldquo add&rdquo call as Q& M&rsquo s valuations are &ldquo undemanding&rdquo . At its share price of 35.5 cents as at the analysts&rsquo report, shares in Q& M are trading at a forward P/E of 17x, almost 1.5 standard deviations (s.d.) below the group&rsquo s historical valuation.
To them, re-rating catalysts include stronger revenue momentum, turnaround of associate Aoxin Q& M and higher revenue intensity in existing clinics. On the other hand, downside risks include sluggish dental demand and larger-than-expected costs for gestating assets.
Maybank Securities analyst Eric Ong has also lowered his target price to 37 cents from 40 cents previously while keeping his &ldquo hold&rdquo call on Q& M.
Like his peers at CGS-CIMB, Q& M&rsquo s 4QFY2022 results also stood below Ong&rsquo s estimates.
&ldquo The variance was largely due to [a] decrease in polymerase chain reaction (PCR) testing revenue, as well as write-off of about $5 million relating to its Covid-19 related consumables,&rdquo says Ong.
Following Q& M&rsquo s lower-than-expected results, Ong has also cut his EPS estimates for the FY2023 to FY2024 by 15% to 16% on slower-than-expected dental business growth and higher operating expenses (opex).
The analyst notes that the group faces headwinds such as increased manpower and occupancy costs, as well as a shortage of trained nurses amid the ongoing inflationary environment.
&ldquo Management articulated that it will now focus on improving the utilisation and productivity of existing clinics (for e.g., adding more dental chairs) to expand margins instead of network expansion going forward,&rdquo he says.
On Q& M&rsquo s investment in data-centric artificial intelligence (AI) treatment, Ong sees this as a potential next-growth catalyst that &ldquo caters to the rising demand for primary and high-value specialist dental healthcare services&rdquo . However, &ldquo we think continued investments in this area may likely weigh on its earnings in the near-term,&rdquo Ong adds.
On Q& M&rsquo s Acumen Diagnostics aiming to progressively roll out its pipeline of new PCR tests, Ong is not assuming any revenue contribution from this new segment given the &ldquo lack of visibility on commercialisation and timeline&rdquo .
Ong&rsquo s new target price is based on an FY2023 P/E of 22x.
Q& M Dental slips into loss of $2.2 mil for 4QFY2022 on lower Covid-19-related revenue contribution
Q& M Dental QC7 0.00% has reported a loss of $2.2 million for the 4QFY2022 ended Dec 31, 2022, down from the earnings of $3.2 million in the same period the year before.
The earnings decline was primarily due to the lower Covid-19-related revenue.
For the FY2022, earnings fell by 63% y-o-y to $11.3 million due to impairments and a decrease in Covid-19-related revenue.
Loss per share for the 4QFY2022 stood at 0.23 cent while earnings per share (EPS) for the FY2022 stood at 1.20 cents.
Revenue for the 4QFY2022 fell by 10% y-o-y to $47.8 million as revenue in both segments fell. Revenue for dental and medical clinics fell by 1% y-o-y to $43.2 million during the quarter while revenue for medical laboratory and dental equipment & supplies fell by 53% y-o-y to $4.6 million with lesser demand for Covid-19 testing in Singapore.
FY2022 revenue fell by 12% y-o-y to $181.2 million as revenue for medical laboratory and dental equipment & supplies fell by 55% y-o-y to $20.3 million. Revenue for dental and medical clinics stood 0.4% higher y-o-y to $160.9 million as Singapore no longer requires Covid-19 testing and government grants were phased out.
As at Dec 31, 2022, the group has 107 dental outlets, five medical outlets and one dental college in operations in Singapore, 10 more dental outlets from the year before. It has 44 dental outlets in Malaysia, six more than the year before and one dental outlet in People&rsquo s Republic of China, which stood unchanged.
As at Dec 31, 2022, the group has one dental equipment & supplies distribution company and a medical laboratory company in Singapore and one dental equipment & supplies distribution company in Malaysia, unchanged from the year before.
As at Dec 31, 2022, cash and cash equivalents stood at $39.7 million.
A second interim dividend of 0.6 cent per share was declared for the quarter. This brings the total dividend for FY2022 to 1.0 cent per share. The 4QFY2022 dividend will be paid on March 24.
" We are pleased to note that our core healthcare business has continued to demonstrate strong resilience and is well-positioned to grow in the coming year,&rdquo says Q& M&rsquo s CEO Dr Ng Chin Siau. &ldquo We are heartened by the fact that core healthcare&rsquo s revenue and ebitda compound annual growth rate (CAGR) for the last five years (FY2018 to FY2022) are 9% and 26% respectively. We believe that with the strategies that we are implementing, this will continue to be the case.&rdquo
&ldquo The group had been very nimble in the Covid-19 period, treating and reacting to threats as opportunities with resulting outstanding results. As we transition to a &lsquo living with Covid-19&rsquo stance now, long term growth will be driven by improved utilisation of our professional staff, optimising the use of clinics and improving margins,&rdquo he adds.
&ldquo The key to this approach is continuing training and upgrading of our dentists and professional assistants and use of technologies,&rdquo he continues. &ldquo The group is very well placed to implement these strategies with the Q& M College of Dentistry, our investments in technologies and an experienced management team, which has led the exponential expansion of our core businesses.&rdquo
Looking ahead, Ng says the group will &ldquo continue to prioritise in investing in our people as they are the bedrock upon which our long term success lies&rdquo .
&ldquo We see the future of dentistry lying in combining the dentist' s domain expertise and valuable experience with data-centric analysis to generate objective and highly accurate dental healthcare plans that are specifically tailored to individual needs&hellip Whether frontline or behind the scenes, [our people] play a vital role in ensuring that we deliver the best dental healthcare to our patients, every single day,&rdquo he says.
In its outlook statement, the group says it will embark on a strategy of intensive organic growth of dental clinics with an expanded team of dentists to support the future growth of its operations in Singapore. The group is also actively exploring opportunities to expand its dental business to Southeast Asian countries at this time.
MEDIA RELEASE
Q&M reports lower full year profits due to impairments
and decrease in Covid-19 related revenue
Core Healthcare1 Revenue strengthens to S$172.1
million for twelve months ended 31 December 2022
(FY2022)
-Core Healthcare Revenue grew at a CAGR of 9% from S$120.8
million to S$172.1 million for the last 5 financial years (FY2018 to
FY2022) demonstrating the inherent strength and sustainability of
our healthcare business
- Covid-19 testing revenue significantly decreased, and also with
write-off of Covid-19 related consumables
-Second interim dividend of 0.6 cent declared for current quarter
making a total dividend of 1.0 cent for FY2022
- Group total revenue of S$181.2m and profit after tax attributable to
shareholders (PATMI) of S$11.3m for FY2022
- Increased utilisation, Optimisation of existing clinics and
Improvement of margins are key strategies going forward.
https://links.sgx.com/1.0.0/corporate-announcements/GUBMD3B818EBZ8I6/748727_QnM_PR_FY2022.pdf
Q&M reports lower full year profits due to impairments
and decrease in Covid-19 related revenue
Core Healthcare1 Revenue strengthens to S$172.1
million for twelve months ended 31 December 2022
(FY2022)
-Core Healthcare Revenue grew at a CAGR of 9% from S$120.8
million to S$172.1 million for the last 5 financial years (FY2018 to
FY2022) demonstrating the inherent strength and sustainability of
our healthcare business
- Covid-19 testing revenue significantly decreased, and also with
write-off of Covid-19 related consumables
-Second interim dividend of 0.6 cent declared for current quarter
making a total dividend of 1.0 cent for FY2022
- Group total revenue of S$181.2m and profit after tax attributable to
shareholders (PATMI) of S$11.3m for FY2022
- Increased utilisation, Optimisation of existing clinics and
Improvement of margins are key strategies going forward.
https://links.sgx.com/1.0.0/corporate-announcements/GUBMD3B818EBZ8I6/748727_QnM_PR_FY2022.pdf
Quantum Healthcare to raise $1 million via placement of new shares
Dental group Quantum Healthcare plans to raise $1 million by placing out just over 285.7 million shares at 0.35 cents each.
PrimePartners Corporate Finance has been hired to place out these new shares, and will earn a fee of 3.5% along the way. The placement is not underwritten.
The placement price represents a 30% discount off the volume weighted average of 0.5 cent for trades done on Jan 27, the last trading day before the placement plans were announced.
&ldquo The board is of the view that the proposed placement will help to strengthen the financial position and capital base of the group and is in line with the company&rsquo s intention to improve its working capital position,&rdquo states the company on Jan 27.
The amount of shares to be placed out represents some 4.1% of the existing share base.
Thomas Tan Gim Chua, the company&rsquo s CEO cum single largest shareholder with nearly 1.7 billion shares, will remain the controlling shareholder as his stake is seen to dip from 24.64% to 23.66% upon full completion of the placement.
Quantum Healthcare used to be called QT Vascular.
Vaccination and testing centre activities going to be busy with more Chinese travellers flooding into this country soon next week.
Analysts mixed on Q& M Dental as core dental business outlook remains uncertain
Q& M has opened 16 new dental clinics ytd, and is expected to open two more clinics in 4QFY2022 to bring its total new clinics for FY2022 to 18.
Analysts from CGS-CIMB Research, DBS Group Research and PhillipCapital are mixed on Q& M Dental Group, and have maintained their &ldquo add&rdquo , &ldquo hold&rdquo and &ldquo buy&rdquo recommendations following the group&rsquo s results for the 3QFY2022 ended Sept 30.
CGS-CIMB&rsquo s target price (TP) stood at 45 cents, up slightly from its previous target price of 44 cents. DBS, on the other hand, lowered its target price to 40 cents from 53 cents previously. PhillipCapital also lowered its target price to 52 cents, down from 60 cents previously.
For analysts Tay Wee Kuang and Kenneth Tan of CGS-CIMB, they believe that Q& M&rsquo s core dental revenue growth is &ldquo commendable&rdquo , with the company&rsquo s 3QFY2022 revenue in line on resilient sales momentum but profits missed as losses from diagnostics arm Acumen and higher finance costs weighed in.
They add that they expect Q& M&rsquo s core dental revenue to remain &ldquo seasonally strong&rdquo in the upcoming 4QFY2022 as employees use their corporate or individual dental benefits before they expire by the year-end.
&ldquo We also expect some revenue recognition from Q& M&rsquo s tender award to operate one of the Joint Testing and Vaccination Centre (JTVC), which commenced operations on Oct 1,&rdquo they write.
&ldquo We expect net profit to improve [around] 55% y-o-y in 4QFY2022 from lower staff costs as staff bonus for FY2022 had been accrued since 2QFY2022 compared to FY2021 when it was solely recognised in 4QFY2021,&rdquo they add.
Further to their report, Tay and Tan note that Q& M is unlikely to hit its annual target of 30 new clinics by end-FY2022. The group opened five new dental clinics, four in Singapore and one in Malaysia, in 3QFY2022, bringing the group&rsquo s total dental clinic count to 152 clinics compared to 128 clinics in 3QFY2021.
&ldquo Q& M has opened 16 new dental clinics year-to-date (ytd), and is expected to open two more clinics in 4QFY2022 to bring its total new clinics for FY2022 to 18, shy of its 30 new clinics target set previously,&rdquo the analysts write.
&ldquo Nevertheless, we understand that the management is considering increasing dental chairs in existing outlets to serve its growth ambitions as leases for new locations increase,&rdquo they add.
See also: Analysts issue downgrades on Nanofilm as outlook worsens
The analysts&rsquo new TP of 45 cents is based on 20x FY2024 price-to-earnings ratio (P/E), 1 standard deviation (s.d.) below the five-year mean. They believe Q& M&rsquo s valuations remain attractive at 17x its forward P/E.
However, according to Tabitha Foo and Paul Yong of DBS, a slowdown in the dental business is to be expected. Their new TP of 40 cents is based on 18x FY2023 P/E for its core dental business or 0.75 s.d. below the five-year historical average.
Foo and Yong say this is due to a larger-than-expected impact of reopening of borders on top-line growth, a longer-than-expected gestation period for new clinics, higher labour
costs and the uncertain macroeconomic outlook. They have cut their FY2022 to FY2024 earnings by 22% to 26%.
They believe that valuations are fair for now at 16x FY2023 P/E, 0.85 s.d. below its five-year historical average. &ldquo As we project it will take a few years for Q& M&rsquo s bottom line to reach FY2020 levels, valuations seem aligned with its fundamentals currently. The stock could re-rate if the group can deliver better-than-expected earnings from its core dental business,&rdquo explain the analysts.
Foo and Yong are remaining conservative on the core dental business while awaiting the ramp-up in profitability for the new clinics. &ldquo While Acumen Diagnostics recently won a Singapore Ministry of Health (MOH) tender for a JTVC, we note that the value of the contract is just [around] 2% of FY2023 revenue, which does not move the needle. We will watch for upside in this segment in the upcoming quarters.&rdquo
Meanwhile, PhillipCapital&rsquo s Paul Chew believes that the company&rsquo s expansion costs will start to &ldquo bite&rdquo .
Despite the number of clinics in Singapore expanding by almost 18% to 106, Chew says revenue growth has been muted. &ldquo The re-opening of borders has shifted spending towards other discretionary spending. There were also disruptions in patient visitations and nurse availability from the recent surge in Covid-19 cases,&rdquo he says.
For more stories about where money flows, click here for Capital Section
Chew notes that net profit from core dental operations declined 17% y-o-y to $4.2 million, with the record expansion of 24 clinics in Singapore and Malaysia over the past 12 months also a burden on profitability in the near term. Considering the additional start-up cost of new clinics and expenditure in the development of AI dental guided software, he believes FY2022 is an &ldquo investment year&rdquo for Q& M.
He expects FY2023 to be a recovery year for the company as new clinics mature and contribute to earnings. Chew&rsquo s new TP of 52 cents values Q& M&rsquo s core dental operations at 25x P/E FY22 earnings.
Positively, Chew notes that the franchise is still expanding and that there has been a &ldquo change in strategy&rdquo in clinic openings. &ldquo The priority is to fill existing capacity in current clinics before new locations are open. Other efforts are to build larger dental centres where profitability is higher from economies of scale,&rdquo he adds.
Q& M posts 62% drop in 3QFY2022 earnings to $3.6 mil
Dental clinic operator Q& M announced that its 3QFY2022 earnings have declined by 62% y-o-y to $3.6 million from $9.5 million a year ago. This brings earnings per share to 0.38 cent per share, compared to 1.01 cent per share last year.
This comes on the back of total revenue decreasing by 26% to $42.5 million from $57.7 million in the previous year. This was mainly due to an 82% y-o-y decline in the group&rsquo s medical laboratory and dental equipment & supplies segment which saw revenue drop by 82% y-o-y to $3.3 million, with less demand for Covid-19 testing in Singapore after the opening of the Singapore economy which no longer requiring extensive Covid-19 testing, as well as the reduction on Covid tests prices to maintain competitiveness in the market.
On the other hand, revenue from dental and medical clinics remained flat y-o-y at $39.2 million during the third quarter.
On a 9MFY2022 basis, earnings were 51% lower y-o-y at $13.5 million, while revenue was 12% lower y-o-y at $133.4 million.
As at end Sept, the group has 106 dental outlets, five medical outlets and one dental college in operations in Singapore. Elsewhere, it has 45 dental outlets in Malaysia and one dental outlet in China.
During the period, cash and cash equivalents stood at $36.5 million.
The group did not declare any dividends this period, as compared to 1.0 cents declared last year. The group said this was because it is conserving cash for corporate activities and future expansion which should be internally funded in the light of rising interest rate. In 4QFY2022, the group says that it will continue to pay down the bank loans.
Dr Ng Chin Siau, CEO of Q& M says: &ldquo Our core healthcare business remains resilient with good prospects for growth. Revenue has come in above $40 million for the eight consecutive quarters and it will continue to be the key contributor to the group&rsquo s revenue and profitability going forward.&rdquo
Meanwhile, with the group&rsquo s strategic investments in Artificial Intelligence (AI) for its dental business, Dr Ng adds: &ldquo The future of dentistry lies in combining the dentist' s domain expertise and valuable experience with AI' s data-centric analysis and ability to generate holistic dental healthcare plans that are specifically tailored to individual needs. This results in better patient management outcome and care which are the main objectives of all medical practice&rdquo
With that, Dr Ng is &ldquo cautiously optimistic&rdquo on the outlook if its core healthcare business.
Q & M Dental&rsquo s Core Healthcare1 Average revenue growth over the past 5 years of 9% per annum
with revenue at all time high of S$42.2m for three months ended September 2022 (3Q2022)
Full details :
https://links.sgx.com/1.0.0/corporate-announcements/L5AGYXCAE50NFS1E/c25407959652b78649280f40dc3051301682ccc6c91088402571a3ca7b7c19bf
with revenue at all time high of S$42.2m for three months ended September 2022 (3Q2022)
Full details :
https://links.sgx.com/1.0.0/corporate-announcements/L5AGYXCAE50NFS1E/c25407959652b78649280f40dc3051301682ccc6c91088402571a3ca7b7c19bf
Always issue shares to ownself....how not to go down. Terrible.
Today one-year low of 0.310 hit. 😬
oops...climbing up. ^_^ ^_^
MARKWONG ( Date: 12-Oct-2022 12:41) Posted:
|
May dip further but Worth holding in long term.
Q& M subsidiary wins $3.6mil MOH tender to operate Joint Testing & Vaccination Center
Acumen Diagnostics, a subsidiary of Q& M Dental group has won a tender from Singapore&rsquo s Ministry of Health to operate a Joint Testing and Vaccination Center (JTVC).
Acumen is 51% owned by Q& M and 49% owned by Aoxin Q & M Dental, a spin off from Q& M itself.
These centres provide testing and vaccination services in Singapore, and Q& M says that the operation of JTVCs by the private medical sector is part of the Singapore government&rsquo s policy and efforts to provide the public with efficient and convenient access to Covid-19 booster shot vaccinations.
Acumen&rsquo s 15-month contract, which is estimated at $3.6 million, commences on Oct 1 and ends on Dec 31, 2023, with actual operations starting from Nov 21.
Dr Ong Siew Hwa, CEO and chief scientist of Acumen Diagnostics, says that the best strategy to keep Singapore&rsquo s population safe and the Singapore economy open to protect livelihoods is for periodic Covid-19 booster shots, so as to counter the natural waning of immunity over time.
Thanks Spurtan. Time for price to recover.
PRESS RELEASE
Q&M?s Acumen Diagnostics wins Ministry of
Health (MOH) tender for operation of a Joint
Testing & Vaccination Center (JTVC)
- Operations to commence on 21 November 2022 with estimated revenueof at least S$3.6 million
Singapore, 11 October 2022 ? Homegrown medical technology Company, Acumen
Diagnostics Pte. Ltd. (?Acumen Diagnostics? ?Acumen? or the ?Company?), a 51% owned
subsidiary of Q & M Dental Group(Singapore) Limited (?Q & M Dental?) and 49% owned by
Aoxin Q & M Dental Group Limited (?AoxinQ & M Dental?), today announced that it has recently
won a Singapore Ministry of Health (MOH) tender for the operation of one of the sites allocated
for Joint Testing and Vaccination Centers1
(JTVC). The operation of JTVCs by the private
medical sector is part of the Government?s policy and efforts to provide the public with efficient
and convenient access to COVID-19 booster shot vaccination.
Acumen?s 15-month contract commences on 1 October 2022 and ends on 31 December 2023,
with actual operations starting from 21 November 22. The value of the contract over the period
is estimated to be worth at least S$3.6 million.
Q&M?s Acumen Diagnostics wins Ministry of
Health (MOH) tender for operation of a Joint
Testing & Vaccination Center (JTVC)
- Operations to commence on 21 November 2022 with estimated revenueof at least S$3.6 million
Singapore, 11 October 2022 ? Homegrown medical technology Company, Acumen
Diagnostics Pte. Ltd. (?Acumen Diagnostics? ?Acumen? or the ?Company?), a 51% owned
subsidiary of Q & M Dental Group(Singapore) Limited (?Q & M Dental?) and 49% owned by
Aoxin Q & M Dental Group Limited (?AoxinQ & M Dental?), today announced that it has recently
won a Singapore Ministry of Health (MOH) tender for the operation of one of the sites allocated
for Joint Testing and Vaccination Centers1
(JTVC). The operation of JTVCs by the private
medical sector is part of the Government?s policy and efforts to provide the public with efficient
and convenient access to COVID-19 booster shot vaccination.
Acumen?s 15-month contract commences on 1 October 2022 and ends on 31 December 2023,
with actual operations starting from 21 November 22. The value of the contract over the period
is estimated to be worth at least S$3.6 million.
PROPOSED PLACEMENT OF 4,985,755 TREASURY SHARES IN THE CAPITAL OF Q& M DENTAL GROUP (SINGAPORE) LIMITED -
https://links.sgx.com/1.0.0/corporate-announcements/8D6QJPITGK3X40CP/8d261f6931510cfc65095235b78182b9d297d49c8d43f819e597eeebdfe05dd8
https://links.sgx.com/1.0.0/corporate-announcements/8D6QJPITGK3X40CP/8d261f6931510cfc65095235b78182b9d297d49c8d43f819e597eeebdfe05dd8
From extract from Investor-One:
Inflation, recession, the war in Ukraine, China?s Covid-19 lockdowns, supply chain disruptions, high raw material, financing, freight, and labor costs are all factors that are high on investors? minds currently. The litany of woes may cause the volatility in the markets to escalate to a financial storm. But the healthcare sector offers shelter and a strong company with a good dividend track record like Q & M may just be your best shelter when the storm breaks out.
Inflation, recession, the war in Ukraine, China?s Covid-19 lockdowns, supply chain disruptions, high raw material, financing, freight, and labor costs are all factors that are high on investors? minds currently. The litany of woes may cause the volatility in the markets to escalate to a financial storm. But the healthcare sector offers shelter and a strong company with a good dividend track record like Q & M may just be your best shelter when the storm breaks out.
CGS-CIMB lowers Q& M Dental target price downgrades to &lsquo hold&rsquo
CGS-CIMB on Friday (Aug 19) downgraded its call on Q& M Dental Group from &ldquo add&rdquo to &ldquo hold&rdquo , while lowering its target price on the stock to S$0.44 from S$0.73, on the back of an earnings miss and several near-term challenges. Q& M&rsquo s net profit of S$9.8 million for H1 ended June was below CGS-CIMB&rsquo s growth expectations at 33.7 per cent of the research house&rsquo s FY2022 estimates. The core dental business saw slower-than-expected growth and the company also had lower operating leverage due to continued investments into its AI (artificial intelligence) guided clinical decision support system, analysts Tay Wee Kuang and Kenneth Tan noted in their report. Q& M&rsquo s diagnostics arm, Acumen, has also reversed FY2021&rsquo s high profitability and dipped back into losses in Q2, with the relaxation of Covid-19 testing requirements.
While Q& M has organic growth plans, it faces several challenges. &ldquo With wage inflation and a tight labour market, Q& M is likely toeing a fine line between balancing profitability and organic growth through clinic expansion,&rdquo Tay and Tan said. The analysts have also reduced their dividend expectation for FY2022 from 1.8 Singapore cents to 1 cent, based on Q& M&rsquo s current assessment of its capital allocation options. This may include paying down its debt in a higher interest rate environment and undertaking potential growth opportunities. CGS-CIMB&rsquo s revised earnings estimates for Q& M take into account the removal of Covid-19 contributions and slower core dental revenue growth. They note upside risks being stronger growth of core dental revenues and significant commercialisation of gestating assets such as the digital AI systems and new PCR (polymerase chain reaction) test from Acumen.
Q& M Dental H1 2022 earnings fall 45% on lower revenue
Q& M Dental reported a 45 per cent drop in H1 2022 earnings to S$9.8 million from S$17.8 million due to lower revenue.
Revenue for the period fell 4 per cent to S$90.9 million from S$94.6 million the year prior, due to 28 per cent lower revenue contribution from the medical laboratory and dental equipment & supplies segment. This was partially offset by a 2 per cent increase in revenue from dental and medical clinics.
&ldquo The revenue contributions from other business segment was significantly impacted by the opening up of the economy and the relaxation of Covid-19 management measures for travellers,&rdquo said Dr Ng Chin Siau, chief executive officer, Q& M Dental.
Q& M Dental plans to continue to expand its dental clinics in Singapore as well as its team of dentists. Similarly, the company aim to continue expanding its dental clinics in Malaysia, with the limiting factor of an increasingly tight labour market. Regionally, Q& M is also looking to open more dental clinics in South-east Asia, depending on available opportunities, pertinent market conditions and the evolving Covid-19 situation.
Q & M Dental Core Healthcare Business resilient in the face of drop in Revenue and Profits from
Covid-19 related business
1 Core Healthcare Business excludes contributions from the Group&rsquo s medical laboratory, share of profit from disposal of associate, Aidite, and expenses incurred on the development of the Group&rsquo s digital Artificial Intelligence (AI) guided clinical decision support system as well as rental rebates received from the Singapore Government.
https://links.sgx.com/1.0.0/corporate-announcements/8RVE81X1WC2ICMWJ/728568_QnM_1H2022_Press_Release.pdf
Covid-19 related business
- Core Healthcare Business1 2Q2022 revenue remains resilient above S$40 million level per quarter for the last 7 quarters
- Posted S$91 million revenue and profit after tax of S$10 million for the six months ended 30 June 2022
- Added 24 dental clinics in the last 12 months
| Period ended 30 June S$&rsquo 000 |
2Q2022 | 2Q2021 | Change | 1H2022 | 1H2021 | Change |
| Group&rsquo s Total Revenue | 44,128 | 50,809 | -13% | 90,910 | 94,571 | -4% |
| -Core Healthcare Business Revenue1 |
42,443 | 40,248 | 5.5% | 83,729 | 81,056 | 3.3% |
| -Other Business | 1,685 | 10,561 | NM | 7,181 | 13,515 | NM |
| Group&rsquo s Total EBITDA | 9,018 | 16,615 | -46% | 21,871 | 31,490 | -31% |
| -Core Healthcare Business1 EBITDA |
9,585 | 9,146 | 5% | 20,285 | 17,994 | 13% |
1 Core Healthcare Business excludes contributions from the Group&rsquo s medical laboratory, share of profit from disposal of associate, Aidite, and expenses incurred on the development of the Group&rsquo s digital Artificial Intelligence (AI) guided clinical decision support system as well as rental rebates received from the Singapore Government.
https://links.sgx.com/1.0.0/corporate-announcements/8RVE81X1WC2ICMWJ/728568_QnM_1H2022_Press_Release.pdf