Lately, I went for wisdom tooth extractions and is in the midst of recovering from the operation. Like many people, I have deep fear of visiting the dentist. So you can imagine how traumatizing the whole experience it was for me. Incidentally, a member of SG Wealth Builder requested me to do a coverage of Q&M Dental Group. Although I do not feel like reliving the horror, I found out this counter could be an interesting stock.
More than 20 years ago, founder of Q&M Dental Group, Dr Ng Chin Siau, was rejected a place in National University of Singapore’s Faculty of Medicine. Eventually, he was enrolled into NUS’ Faculty of Dentistry instead. But the rejection turned out to be a blessing in disguise as Dr Ng went on to found one of the largest private dental clinic networks in Singapore.
As a private dental clinic operator that caters to the mass market, Q&M Dental faces stiff competition from big boys like Raffles Medical, polyclinics and various smaller players. In addition, Singapore is a small market that is not big enough for many listed companies to develop any sort of sustainable growth. Under such circumstances, Q&M has no choice but to embark on both organic and inorganic expansions to enhance its investment moat.
From a single dental clinic in Bukit Batok in 1996, Dr Ng had certainly grown Q&M Dental to be a force to be reckoned among the dental fraternity. As at 30 September 2017, the Group has a total of 72 dental outlets, 4 medical outlets and 1 aesthetic centre in operations. He had also ventured overseas, with a total of 13 dental outlets in Malaysia and 1 dental outlet in People’s Republic of China.
The aggressive expansion came at a price though. The Group took on quite a substantially large amount of debts, with current liabilities of $90 million and non-current liabilities of $11 million. With current assets of only $58 million, Q&M Dental may have overstretched itself. [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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