During the 1HFY2022 ended June, Q&M’s revenue fell by 4% y-o-y to $90.9 million while net profit fell by 45% y-o-y to $9.9 million.
On the back of the “disappointing” results, Foo and Yong have cut their earnings for the FY2022 and FY2023 by 31% and 33% respectively.
That said, the analysts continue to remain positive on the primary healthcare segment in the long-term as the group has a “clear expansion strategy” for the next 10 years and has been “aggressively executing its plan”.
“However, we lower our forecasts slightly to 10 new clinics a year in Singapore and we push back our trajectory of seeing the fruits of organic growth to FY2023 to FY2024,” they write.
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At its current levels, the analysts deem Q&M’s valuations as “fair” for now at an FY2023 P/E of 18x, 0.5 s.d. below its five-year average.
“As our new forecasts assume it will take a few years for Q&M’s bottom-line to reach FY2020 levels, valuations seem aligned with its fundamentals currently. We believe that a solid earnings momentum from the core dental business will drive its share price re-rating,” the analysts say.
That said, they add that they remain conservative on the core dental business as they await the ramp up in profitability for the new clinics.
Shares in Q&M closed 0.5 cent lower or 1.14% down at 43.5 cents on Aug 16.
