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Q & M Dental Group (Singapore) Limited’s Latest Earnings: What Investors Should Know

Q & M Dental Group (Singapore) Limited (SGX: QC7) reported its fiscal first-quarter earnings last Friday. The reporting period was for 1 January 2016 to 31 March 2016.

As a brief background, Q & M Dental Group runs a chain of dental clinics around Singapore. It also owns dental supplies and equipment distribution companies in Malaysia and China. The business of Q & M Dental Group can also be divided into three main buckets, namely Dental and Medical Clinics, Dental Equipment & Supplies Distribution, and Dental Supplies Manufacturing.

You can catch the results from the company’s previous quarter in here.

Financial highlights

The following’s a quick rundown on some of Q & M’s latest financial figures:

  1. For the first-quarter of 2016, revenue rose by 18.5% year-on-year to $34.4 million.
  2. Net profit attributable to shareholders was up by 28% compared to the previous year. Profit for the reporting quarter finished at $3.7 million.
  3. But, diluted earnings per share (EPS) grew only 9%, coming in at 0.47 cents. This compares with the EPS of 0.43 cents recorded in the first-quarter of 2015. Q & M Dental Group had a weighted average number of ordinary shares of 782.4 million at the end of the first-quarter of 2016, up from the 667.9 million shares seen at the end of the first-quarter of 2015.
  4. Cash flow from operations for the first-quarter of 2016 was a negative $1.5 million with capital expenditures coming in at $1.7 million. This puts the dental care provider in the negative free cash flow zone to the tune of $3.2 million. This compares with the negative free cash flow of $2.5 million recorded in the first-quarter of 2015 (a negative $1.3 million in cash flow from operations and $1.2 million in capex).
  5. As of 31 March 2016, Q & M Dental Group had $60.7 million in cash and equivalents and $89 million in debt. This compares with the $65 million in cash and equivalents and $80.2 million in debt seen at the end of the last sequential quarter.

In summary, Q & M Dental Group saw both its top-line and bottom-line grow in the reporting quarter. Bu, the dental care provider had registered negative free cash flow and had picked up more debt compared to the previous quarter.

Operational highlights

Dental and Medical clinic revenue rose 28% to end the quarter at $28.3 million. The segment was lifted by higher revenue from existing and new dental outlets as well as multiple acquisitions.

Revenues from the Dental Equipment & Supplies Distribution segment and Supplies Manufacturing segment fell by 5% and 16% year-on-year, respectively. The Dental Equipment & Supplies Distribution segment was hampered by a lower contribution from Malaysia and recorded $2.4 million in revenue. Revenue from the latter segment came in at $3.7 million, down because of lower revenue from Aidite, a recent acquisition.

The dental firm ended the reporting quarter with a total of 68 dental outlets, four medical outlets and one aesthetic centre in Singapore. It also had eight dental outlets in Malaysia, as well as three dental hospitals and four dental outlets in China. For perspective, at the end of the first-quarter of 2015, Q & M Dental Group had 60 dental outlets, one mobile dental clinic, three medical outlets, and one aesthetic centre in Singapore; eight dental outlets in Malaysia; and three hospitals and four dental outlets in China.

Ng Chin Siau, Q & M Dental Group’s chief executive, had the following comments in the earnings release on the company’s performance:

“In the challenging 1Q16 environment, we are pleased to be able to report a 28% growth in our profits attributable to shareholders due to financial discipline and strong execution. Q & M is making good progress in its ambition to deliver professional dental healthcare services to patients in Singapore, Malaysia and China and remain focused in its pursuit of opportunities to expand in dental-related industries in the region.”

At its closing price last Friday of $0.67, Q & M Dental Group traded at over 47 times trailing earnings.

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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.