Excerpts from Maybank report

Q&M Dental Group (SGX: QC7)

Q&M Dental 2Q22 net profit of SGD3.4m (48% QoQ; -60% YoY) was disappointing due to the sharply lower-than-expected contribution from PCR tests. While 2Q revenue fell 13% YoY to SGD44.1m, earnings suffered more due to negative operating leverage amid current inflationary pressures. To conserve cash, the group did not declare an interim DPS. We cut our FY22-24E EPS by over 40% on complete removal of testing revenues and slower core dental business growth. Downgrade to HOLD with a lower TP of SGD0.40 as we roll forward our valuation to 20x FY23E P/E.

Outlet expansion to drive core dental business

Management will now focus on its dental operations (SG/MY: +17/+7 new outlets in the last 12 months) and has initiated a strategy of intensive organic growth going forward. At the same time, the Group will continue to look for opportunities...