Outlook improves as the Group stepped up expansion plan to support future growth. It is on track to meet its target of opening of at least 5 new clinics per year – opened two new clinics in Singapore and three acquisition deals in Singapore and Malaysia (two yet to conclude). Management plans to continue its expansion momentum for its dental clinics as well as its team of general dental practitioners and dental specialists, in Singapore and Malaysia in 2H17.
Upgraded to Neutral with lower TP of S$0.61 (previously S$0.65)
While our view remains unchanged for soft FY17e revenue, we raised FY17e EPS by c.13% to 1.9 cents on better than expected results from associates. Our FY17e EPS excludes gain on spin-off of Aoxin and spin-off listing cots. We lowered PER on a structural slowdown in Singapore’s healthcare services.
Potential re-rating catalysts would be (i) the Group stepping up its pace of its earnings accretive acquisitions; and (ii) better-than-expected results from associates. Successful acquisition of Shenzhen Superline will boost contribution from associates and could be the next Aidite.