To recap, on Apr 17, Q&M announced plans to seek a secondary listing on Bursa Malaysia to broaden its investor reach and widen its investor base; increase the liquidity of its shares through multiple trading platforms; and provide an additional platform for future fundraising.
"We think the potential fundraising from a secondary listing could accelerate growth in Q&M’s clinic footprint in Johor, Malaysia, to capitalise on the development of the Johor-Singapore Special Economic Zone (SEZ)," says Tay.
In its announcement, Q&M shared that it has appointed relevant professional advisors, including a principal financial advisor in Malaysia and a Singapore legal counsel, who have commenced preparatory work on the potential secondary listing, although no application has been made to the Securities Commission of Malaysia to date.
Apart from the potential secondary listing being a key rerating catalyst, Tay also likes the group's h-o-h earnings growth in 2HFY2025 from the consolidation of Aoxin and EM2AI as further catalysts.
See also: Singapore-focused REITs to benefit from lower debt costs, says JPM
On Apr 30, Q$M acquired about 88 million shares in its associate Aoxin Q&M, for a total consideration of about $2.8 million or 3.21 cents per share from Aoxin’s executive director and group CEO, Dr Shao Yongxin. The consideration will be net off from the about RMB 72.3 million ($13.0 million) owed to Q&M as a result of a shortfall in profit guarantee by Dr Shao to Aoxin.
Consequently, Q&M launched a mandatory unconditional offer for Aoxin, with an offer price of 3.21 cents per share. Given Q&M’s $25.3 million carrying value of its investment in Aoxin on its 32.78% direct stake as of FY2024, the incremental 17.2% increase in Aoxin for about $2.8 million (which will bring Q&M’s direct stake to 49.98%) could potentially lead to a one-off, non-cash impairment loss recognised from the remeasurement of investment in Aoxin for 1HFY2025, in Tay's view.
Tay has kept estimates unchanged for now, as he awaits results of its mandatory unconditional offer for Aoxin.
Shares in Q&M closed at 40 cents on June 12.
