Money Talk: Q&M, Cordlife, Midas

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. Q & M Dental Group

Broker: CIMB

Q&M is under-researched and undervalued, reflecting the market's lack of appreciation for its almost recession-proof business model, backed by both its strong dentistry franchise and overseas expansion plans. A large chunk of its future earnings (about $72 milllion) is guaranteed for a decade, which is unprecedented for most lucrative healthcare businesses.

We like Q&M for its strong recurring domestic earnings and international expansion plans. Re-rating catalysts are the opening of more clinics, higher charges, expansion through acquisitions, joint ventures and/or strategic alliances, as well as the listing of its overseas dental business.

Initiate ADD wuith a target price of 55 cents.

2. Cordlife Group

Broker: OSK-DMG

Cordlife's 1QFY15 (Jun) core profit of $1.7 million made up 13 per cent of our estimate. While revenue increased on a rise in client deliveries, higher marketing expense to boost long-term growth in India dragged profits lower.

We remain positive on its long-term growth story and believe the stock offers significant upside given its 32 per cent drop since August. We reduce our 2015-16 EPS (earnings per share) by 15-17 per cent to reflect lower royalty income.

Maintain BUY with a lower target price of $1.30 (51 per cent upside).

3. Midas Holdings

Broker: OCBC Investment Research

Midas' 3Q14 results were way below our expectations. While revenue grew 7.7 per cent YoY to RMB324.2 million on the back of higher revenue from its Aluminium Alloy Extruded Products Division, Midas' PATMI (profit after tax and minority interests) plunged 91 per cent to RMB1.5 million due to higher start-up and finance costs arising from its new plants. Higher start-up expenses will drag down its performance in the next 12-18 months.

Reflective of this, we cut our FY14 and FY15 PATMI forecasts by 33.4 per cent and 38.2 per cent respectively.

Downgrade to HOLD with fair value estimate lowered to 30 cents from 50 cents.

Compiled by Ann Williams

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