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2 Key Insights from Q&M Dental Group (Singapore) Limited’s Management

Q&M Dental Group (Singapore) Limited (SGX: QC7) is one of the best performing small caps stocks in Singapore for 2015 so far. From the start of year to the end of November, Q&M Dental Group’s shares have generated a total return of 75.3%.

There may be lessons we can learn from this outperformer, in particular, its management team. Recently, Q&M Dental Group’s chief executive Dr Ng Chin Siau was featured in an interview series by bourse operator Singapore Exchange Limited  (SGX: S68). There may be valuable insights we can pick up from the interview.

As a brief background, Q&M Dental Group runs a chain of dental clinics around Singapore and also has an interest in dental clinics in countries like China and Malaysia. The company also owns dental supplies and equipment distribution companies in Singapore and Malaysia. At the end of 2014, it had a patient pool of more than 600,000 island-wide.

Without further ado, here are two key excerpts from the interview.

On empowering people

“Patients tend to be doctor-centric – they usually come back to see the same doctor. Our primary goals are customer satisfaction, as well as excellent and responsible service.”

This ethos extends to staff and partners of the company.

“It’s about how you treat people. If you show them respect, give them room to exercise their judgment and independence, they will reciprocate”

Dr Ng recognises that his business thrives on customers returning to its clinics. As such, he places customer satisfaction high on his list of goals. He achieves his goals by empowering his staff and partners to exercise judgement and independence. This may, in turn, translate to better customer service.

With a customer base of 600,000, as mentioned earlier, Q&M Dental Group has been successful in garnering a good slice of the Singapore dental market.

On paying the right price

“People are willing to pay 20 to 30 times PE for unlisted entities, which is way too much. There’s a lot of money chasing a limited number of projects.”

As a result, Q & M has switched its attention to government-run dental hospitals in provincial cities from private hospitals in locations like Beijing or Shanghai.

“Tier 1 cities attract the most bidders, including those from the United States, Taiwan, Germany. In Tier 2 and 3 cities, the local governments are more receptive to our presence, and we can explore opportunities to privatise a provincial dental hospital with share ownership”

Dr Ng is also adamant about paying the right price when it comes to acquisitions. He approaches this by being patient for the right price to come along and by avoiding competition from bigger players. In this instance, Q&M Dental Group is looking at Tier 2 and Tier 3 cities for opportunities, which seemingly attracts less bidders as compared to Tier 1 cities.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.