Q&M Dental may get China fund injection

 By Lee Mei Xian Q&M Dental Group's release of second-quarter results yesterday was accompanied by news that its China expansion plans may get a shot in the arm from a Chinese private equity investment firm. The group said its wholly owned Chinese subsidiary, Q&M Dental Group Holdings China Pte Ltd (QDHC) has sealed a non-binding memorandum of understanding (MOU) with Kunwu Jiuding Capital Co Ltd for the latter to invest between RMB192 million and RMB240 million (S$38-47 million) in Shanghai Q&M Investment Management and Consulting Co Ltd (SQM). SQM is wholly owned by QDHC. In return, Kunwu Jiuding - described as a leading Chinese domestic private equity investment company - will get up to 20 per cent of the increased share equity of SQM. The MOU is valid for 12 months. Q&M told BT that SQM will develop a detailed listing plan but the group has not decided for now whether the listing will be in Singapore or China. "The injection of funds in renminbi denomination will support Q&M's expansion plans in the People's Republic of China, as QDHC and SQM are eyeing to acquire various dental clinics, hospitals and laboratories," Q&M said.Headquartered in Beijing with more than 50 branches and agencies across China, Kunwu Jiuding will provide strategic planning, industry consolidation, market development and management team improvement in China to support Q&M's expansion plans, the dental group said. "The group believes that as the rising affluence in the PRC is driving the demand for better quality dental healthcare standards and services, the group should capitalise on the immense potential of the PRC's fast-growing market for dental healthcare services. "Q&M said at end-June this year, it has "a total of 47 dental clinics, four dental centres and one mobile dental clinic in operation, compared to 41 clinics, two dental centres and one mobile dental clinic at the end of June 2011 in Singapore". While the new outlets have boosted revenue, their start-up costs hit the group's net profit, which fell 17 per cent from a year earlier to $1.1 million for the second quarter ended June 30, 2012.Revenue from its dental clinics grew 17 per cent year-on-year to $13 million in Q2. In the fiscal first half, revenue from dental clinics rose 18 per cent over the previous year to $25.5 million, thanks to an expansion of dental outlets and increased revenue from existing clinics. H1 net profit was $2.2 million, down 7 per cent from a year earlier. Reiterating the group's plans, Q&M group chief executive officer and founder Ng Chin Siau said: "Clearly, we will continue to look for opportunities - through acquisitions, joint ventures, or strategic alliances - to drive revenue and profitability growth in Singapore, China and and Malaysia." Q&M declared an interim dividend of 0.3 cents per share. The counter closed yesterday up 1.3 per cent at 38 cents.