Q & M Dental

(27-06-2012, 09:44 AM)money Wrote: What the Q&M CEO never discusses is if it so profitable, then there will be strong competition, how are they going to make money when every tom, dick and harry want a share of the pie.

If naive investors will readily pay a rich valuation of 40x, they have to be patient enough to wait at least 10 years before money flows into their pockets, assuming the growth can be maintained. In high likelihood, investors will be disappointed

not every tom, dick and harry who wants it can get it, you need dentist. Without a qualified dentist, it is not going to happen. Neither do you see GP opens their clinic beside each other to compete for business.

Of course, you have to pay them high salary to attract the very small pool of dentists. After they earn enough money, then they will open their own clinic to compete with you.

Indeed, the PER is too high even when compared to their ROA and ROE.

(27-06-2012, 10:00 AM)shanrui_91 Wrote: Neither do you see GP opens their clinic beside each other to compete for business.

That's weird! I always see Clinics side-by-side. If not, there'll usually be at least 2-4 of them within 50m-100m of each other in Town Centres. Even for Dental Clinics, I usually see at least 2 within walking distance, especially those located in MRT shops.

Perhaps you're referring to those located in Malls?

(27-06-2012, 10:29 AM)KopiKat Wrote: That's weird! I always see Clinics side-by-side. If not, there'll usually be at least 2-4 of them within 50m-100m of each other in Town Centres. Even for Dental Clinics, I usually see at least 2 within walking distance, especially those located in MRT shops.

Perhaps you're referring to those located in Malls?

seemed like my horizon is very small. I should start walking around Singapore more often

I did a brief check of my surrounding and only found 1 GP and dental clinic each within 500m radius of my house

(27-06-2012, 10:38 AM)shanrui_91 Wrote:

(27-06-2012, 10:29 AM)KopiKat Wrote: That's weird! I always see Clinics side-by-side. If not, there'll usually be at least 2-4 of them within 50m-100m of each other in Town Centres. Even for Dental Clinics, I usually see at least 2 within walking distance, especially those located in MRT shops.

Perhaps you're referring to those located in Malls?

seemed like my horizon is very small. I should start walking around Singapore more often

I did a brief check of my surrounding and only found 1 GP and dental clinic each within 500m radius of my house

My observation is the same as KopiKat. I found in popular site, there are 3-4 Clinic and 1-2 dental Clinic within 200-300 meters radius. Those sites are not in mall.

http://mservices.moh.gov.sg/eservices/clinicSearch.do

did a check and I found a total of 3339 GP + Dental + Gynaecology + Specialist + Aesthetics + Polyclinic in Singapore.

Of which there are 776 dental and 239 are public dental clinic, which is 537 private dental clinic and 1021 private dentist.

Singapore's area is 778 km2 which means an average of 1 private dental clinic and 2 dentists per 1.45 km2. 1.45 km2 is equal to an area of 38m x 38m

Therefore, the average is 1 private dental clinic in every 38m x 38m square

Shanriu_91
You have stated:
"Singapore's area is 778 km2 which means an average of 1 private dental clinic and 2 dentists per 1.45 km2. 1.45 km2 is equal to an area of 38m x 38m
Therefore, the average is 1 private dental clinic in every 38m x 38m square"

A square area of 1.45 sq km is formed by four equal sides of 1.2km (1,200m) each.
Your conclusion that there is a dental clinic in every 38mx38m means that for every 38 steps taken, one is likely to come across a dental clinic.

(27-06-2012, 02:32 PM)portuser Wrote: Shanriu_91
You have stated:
"Singapore's area is 778 km2 which means an average of 1 private dental clinic and 2 dentists per 1.45 km2. 1.45 km2 is equal to an area of 38m x 38m
Therefore, the average is 1 private dental clinic in every 38m x 38m square"

A square area of 1.45 sq km is formed by four equal sides of 1.2km (1,200m) each.
Your conclusion that there is a dental clinic in every 38mx38m means that for every 38 steps taken, one is likely to come across a dental clinic.

time to revise my math. I square root it in metre before i converted it back. So I should have converted it to 1,440,000 and not 1440 before i square root it.

you are right, so its 1 private dental clinic in every 1.2km x 1.2km square

instead of looking at just distance factor, i would weigh in more on other factors like population demograhics, level of service provided, and government interventions etc..

What is going on with Q&M's share trading? A staggering 20 Million shares exchanged hands in the first sixty-five (65) minutes of SGX trading this morning (the fifth highest share volume of any SGX counter). This following 11.4 Million Q&M shares being traded in yesterday's session. The counter has had a good run recently but it isn't clear what the drivers are for this, at least to me it isn't.

Vested.

Q&M Dental made an interesting announcement yesterday morning regarding its PRC subsidiary. Q&M China has entered into a non-binding MOU with a Chinese Private Equity Investment Company for a 20% equity dilution. I append the announcement below.

I have done some arithmetic, admittedly rather basic arithmetic. Lets assume that this Chinese PE Investor pays at the bottom end of the quoted price range - I suspect this will be over a number of years - i.e. RMB 192 Million for a 20% interest ............. this would put an approximate value on Q&M's PRC Subsidiary of ~ S$ 188 Million.

I can't help comparing this with the total market cap for the Singapore listed parent, i.e. covering its entire business, of S$ 204 Million (at tonight's closing price on the SGX). May be Q&M's China business really is going to be very valuable!?!?

I realise that I am in a minority of no more than approximately two VB forummers who are positive regarding Q&M and I suspect that this VB posting will likely attract the usual voices of derision about the counter (obscene P/E, low cash generation etc. etc.) .............. but on first inspection, I think this is rather a good deal ........... which demonstrates that it does have serious value accretion potential ................ and I would hope Q&M's Dr. CEO converts this non-binding instrument into a binding version rather quickly.

Vested
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Q & M DENTAL GROUP (SINGAPORE) LIMITED
(Company Registration No. 200800507R)

PROPOSED STRATEGIC INVESTMENT BY KUNWU JIUDING CAPITAL CO LTD

1. THE MEMORANDUM OF UNDERSTANDING
1.1 The Board of Directors (the "Board") of Q & M Dental Group (Singapore) Limited (the "Company" and together with its subsidiaries, the "Group") are pleased to announce that Q & M Dental Group Holdings (China) Pte. Ltd. ("QDHC"), a 100% owned subsidiary of the Company together with Shanghai Q & M Investment Management & Consulting Co Ltd (“SQM”), a 100% owned subsidiary of QDHC, have on 13 August 2012 entered into a non-binding memorandum of understanding (the "MOU") with the Kunwu Jiuding Capital Co Ltd (the "Investors"). The MOU relates to a proposed investment (the "Proposed Investment") which will complement the Group's expansion plans of its dental healthcare business into the People's Republic of China (the "PRC").

1.2 Kunwu Jiuding Capital Co Ltd is a leading Chinese domestic private equity investment company. Headquartered in Beijing, Kunwu Jiuding Capital Co Ltd has more than 50 branches and agencies all over China.

1.3 The MOU sets out in broad terms the principal terms and conditions under which the parties shall cooperate towards implementing the Proposed Investment. After signing the MOU, the Investors shall conduct due diligence investigations on QDHC and SQM

1.4 The Investors intend to make a total investment of RMB 192 million to RMB 240 million in SQM, constituting upto 20% of the share equity of SQM after increase in the share capital of SQM. SQM shall develop a detailed listing plan. The MOU is valid for 12 months.

2. RATIONALE FOR THE PROPOSED INVESTMENT
The Investors are able to provide local renminbi which satisfies the currency regulations for the intended purchases by QDHC and SQM of various dental clinics, hospitals and laboratories in PRC. Further the Investors are able to provide strategic planning, industry consolidation, market development and management team improvement in PRC to support the Group’s expansion plans.
The Group believes that as the rising affluence in the PRC is driving the demand for better quality dental healthcare standards and services, the Group should capitalise on the immense potential of the PRC's fast growing market for dental healthcare services. The Proposed Investment will enable the Group to push ahead with their plans of acquiring dental clinics and hospitals.

As it makes further inroads into the PRC, the Group expects its PRC business to add greater geographical diversity to its existing business and become an important growth contributor that strengthens the Group's earning base.

3. FURTHER COMPLIANCE OBLIGATIONS
The Company anticipates that if the Proposed Investment proceeds, it would constitute a transaction under Chapter 10 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The Company will comply with the relevant requirements of Chapter 10 of the Listing Manual of the SGX-ST in a timely manner as the matter progresses. The Board will also update shareholders on any new and significant developments arising in respect of the Proposed Investment.

4. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS
None of the Directors or substantial shareholders of the Company have any interest in the proposed transaction save for their interests arising by way of their shareholdings and/or directorships, as the case may be, in the Company.

On behalf of the Board
Dr Ng Chin Siau
Group Chief Executive Officer
13 August 2012
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