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3 Things Investors Should Know From Q & M Dental Group (Singapore) Limited’s Latest 2016 Results

Q & M Dental Group (Singapore) Limited (SGX: QC7) primarily operates a network of private dental clinics in Singapore, Malaysia, and China. The company currently has three business segments, namely, Primary Healthcare, Dental Equipment & Supplies Distribution, and Dental Supplies Manufacturing.

At the start of March, the company reported its 2016 full year results. Let’s look at three useful pieces of information from the announcement:

1. The overall result

The table below shows some important numbers from Q & M’s income statement for 2015 and 2016:

Q & M Dental 2016 financial statement
Source: Q & M 2016 earnings release

The big-picture view is that Q & M’s financial performance in 2016 is stronger when compared to 2015. But, the company’s bottom-line growth was driven partly by a one-off gain of S$21.3 million from the spin-off of a subsidiary.

If one-time events (this includes both gains and expenses) are stripped from Q & M’s results, the company’s profit before tax would be S$20 million and S$13.9 million in 2016 and 2015, respectively.

2. Detailed segmental performance

The table below shows the financial numbers from Q & M’s various segments:

Q & M Dental 2016 segmentfinancial statement
Source: Q & M 2016 earnings release

Although all three of Q & M’s segments enjoyed revenue growth, only Dental Supplies Manufacturing delivered bottom-line growth.

The weak performance from the Dental Equipment & Supplies Distribution segment was mainly due to lower contributions from Malaysia and an impairment of goodwill for Q & M’s equipment and supplies distribution business in the country.

3. Future plans

It is important that investors know not just how a company’s existing business is performing, but also its plans for the future in order to assess the company’s investment merits.

The following is what Q & M has to say about its expansion plans:

“1) Expansion of network of dental clinics in Singapore and acquisitions of specialist dental clinics in Singapore

The Group will continue widening its network of dental clinics in Singapore organically and through acquisition. It will also continue to expand its team of dentists to support the future growth of its operations in Singapore. With 71 dental outlets in Singapore, the Group believes it is well-positioned to cater to the rising demand for primary and higher value specialist dental healthcare services.

2) Expansion into private dental healthcare market in Malaysia

Currently, the Group has 3 dental clinics in Johor, 1 dental centre and 3 dental clinics in Kuala Lumpur and 2 dental clinic in Melaka. The Group is closely monitoring the Malaysian economy before making further expansion into Malaysia.

3) Expansion into private dental healthcare market in the People’s Republic of China

The main thrust of the Group’s proposed joint ventures and organic growth initiatives in PRC is to develop a new and sustainable growth pillar that can yield long term value for the Group. The Group will continue to seek opportunities for the acquisition of larger and established dental institutions, dental laboratories and dental supplies manufacturers in PRC.

4) Expansion through acquisitions, joint ventures and/or strategic alliances

The Group is continuously looking for opportunities to expand its businesses through acquisitions, joint ventures or strategic alliances with parties who create synergistic value with its existing business in Singapore, PRC and Malaysia.”

In all, 2016 was a rather positive year for Q & M, as the company experienced strong growth in both revenue and profit. But, investors may want to keep an eye on the company’s aggressive expansion initiatives, since explosive growth can carry risks.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.