However, the revenue decline was partially mitigated by higher revenue from dental equipment and supplies distribution companies in Singapore and Malaysia.
See: Q&M Dental reports 17% rise in 1Q earnings to $4.5 mil
Q&M saw “broad-based growth across business segments and countries,” says analyst Soh Lin Sin in a report on Wednesday. “Contributions from seven new dental clinics in Malaysia, alongside higher demand in existing dental clinics in both Malaysia and Singapore, mitigated the loss of three dental clinics in Singapore.”
“Post-deconsolidation of its major revenue drivers in China, the group is stepping up its regional expansion in Singapore and Malaysia to plug the gap,” she adds.
Looking ahead, the analyst opines that the new Malaysia government could give Q&M’s Malaysia Distribution business a boost.
“Abolition of GST (Goods and Service Tax), as well as stronger Malaysia ringgit and improving economy, could raise Malaysian’s purchasing power for import products,” Soh says.
However, she expresses concern over the lack of progress on Q&M’s announced expansion plans.
“We are impressed by its intensive expansion strategy (from its previous target of opening at least five new clinics per year to 20 new clinics this year), but we have yet to see any new clinics opened or acquisition done in 1Q18,” Soh says.
As at 12.32pm, shares of Q&M are trading 1 cent lower at 59.5 cents, implying an estimated price-to-earnings ratio of 34.3 times and a dividend yield of 2% for FY18.
