Q&M Dental Group’s third-largest China deal could open larger opportunities, analysts say

It will buy stakes in a dental research firm for SGD13.8m.

The healthcare firm plans to deepen its footprint in China as it proposed to buy a 33% stake in Shenzhen New Perfect Dental Research.

According to a report by Maybank Kim Eng, this is the firm’s third-largest deal in China since it acquired a dental hospital group (Aoxin) and a dental supplies manufacturer (Qinhuangdao) in 2014.

Maybank Kim Eng noted that the deal marks an important milestone for Q&M, as it has not made any major acquisitions in China with sizeable profit guarantees since 2014.

“Its last four deals were all smaller, with a total profit guarantee of only SGD0.4m. SZNP will add >SGD1m in FY17 and boost China contributions from c.35% in 2016 to c.40% in 2017,” the report noted.

“Also, the acquisition of a second large dental supplies company suggests a widening of its M&A net to include more supply companies that can fit into its vertical integration strategy. This suggests higher M&A momentum in future,” Maybank Kim Eng added.