The sellers are Q&M's own key management including CEO Dr Ng Chin Siau, COO Dr Raymond Ang, and CEO of EM2AI Ryan San.
According to Q&M, EM2AI, previously loss-making, is turning around.
In addition, EM2AI had received the Medical Devices Included Class 1 licence from the Australian Government Department of Health and Aged Care, Therapeutic Goods Administration, for its dental AI solutions.
According to Tay, this licence allows EM2AI to sell and distribute its dental AI solutions in Australia and it has an agreement with an established provider of dental solutions in the region to integrate its dental AI solutions into this customer’s platform.
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"With the licence win in Australia, EM2AI will now be able to support its Customer’s network in Australia and expand the use of its dental AI solutions beyond its current footprint of over 1,100 clinics across Singapore, Malaysia, Thailand and Vietnam," says Tay.
According to Tay, Q&M has identified Singapore, Malaysia and China as potential markets where it is looking to expand its operations, either through organic or inorganic growth.
For now, Tay is keeping his FY2025 and FY2027 earnings estimates. His target price of 43 cents is based on 20x FY2026 P/E, which is 0.5 s.d. below its 5-year mean.
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"We believe a re-rating of the stock will follow more significant improvement to its profitability," says Tay.
Re-rating catalysts, according to Tay, will include continued improvement in h-o-h profitability for its core dental business and potential M&As that could significantly contribute to its profits.
On the other hand, downside risks include goodwill impairments on EM2AI, unfruitful expansion and poor integration of acquired clinics resulting in downward pressure on margins.
Q & M Dental Group (Singapore) shares changed hands at 30 cents as at 2.25pm down 1.67%.
