• Core Dental Dominance: High-quality dental income now constitutes 98.9% of group revenue, providing a resilient, non-discretionary revenue base that serves as a defensive anchor for debt servicing.
• Resilient earnings with scope for improvement: While normalised profit remained stable at S$17.0 million, the core dental business’s 16% profit surge and management’s ongoing cost-optimisation efforts signal significant room for margin expansion.
• Successful Aoxin integration, turnaround in China: Aoxin’s swing from an RMB 8.0 million loss to an RMB 6.9 million net profit validates management’s regional M&A strategy and establishes a de-risked, scalable platform for future growth.
• Improving leverage with decent coverage: The group’s credit profile continues to strengthen, with Net Debt / EBITDA moderating to 0.75x, with a comfortable interest coverage of 3.8x, and a robust S$117.1 million cash position providing a significant liquidity buffer.
• Maintain our liking of 2028 bonds: We continue to favour the QNMSP 3.95% 2028s for their attractive 100+bps yield pickup over higher-grade peers, offering a compelling risk-reward profile backed by an improving credit story.
Related articles:
Credit Update: Q&M shows stable dental results in 1H25
Q&M Dental Group (Q&M) has successfully navigated its post-pandemic transition, evolving from a Singapore-centric clinic operator into a robust regional dental powerhouse. As of 31 December 2025, the group operates a comprehensive ecosystem of over 150 clinical outlets, supported by strategic “value-chain” assets including a dental college, an AI-driven technology arm, and a regional distribution network for equipment and supplies.
The group has streamlined its operations into 2 distinct operating segments: 1) Core dental business, which encompasses dentistry services alongside the distribution of dental supplies and equipment, and 2) Other businesses, which handle legacy diagnostic and laboratory services. This latter segment has been strategically downsized to reduce the volatility associated with pandemic-era testing revenues.
Overall, the full year ending 31 December 2025 (FY25) results signal a successful pivot for the group. By anchoring its growth in high-quality, recurring dental services, Q&M has effectively detached its earnings from unpredictable revenues linked to Covid-19. This operational stability is reinforced by the strategic turnaround of its China subsidiary, Aoxin Q&M. Following a rigorous financial “clean-up” and resolution of prior regulatory overclaims, Aoxin has evolved from a capital-heavy associate into a profitable, self-sustaining contributor to the group’s bottom line.
Core Dental Dominance: Resilient Revenue Engines
Overall group revenue rose 9% year on year (YoY) to S$197.2 million (FY24: S$180.7 million). This growth is spearheaded by stronger growth from the group’s core dental business, which grew topline by 12% YoY to S$195.0 million (FY24: S$173.8 million). This performance was driven by stronger patient volumes in Singapore (84.4% of the group’s revenue) and the full-year consolidation of Aoxin Q&M following its successful integration as a subsidiary.
The S$21.2 million surge in core dental group revenue effectively neutralised the S$4.7 million decline in the other businesses segment. This decline was a deliberate result of the cessation of the group’s medical laboratory operations in September 2024. A geographical breakdown reveals a dual-track performance. Revenue from the mature Singapore and Malaysia markets (91% of group revenue) remained flattish, with the growth mainly from the full consolidation of Aoxin Q&M in China, which now contributes roughly 9% of consolidated revenue. Consequently, non-core dental revenue now accounts for a negligible 1.1% of total revenue. We like how the core dental business has increased in total proportion of the group’s revenue over the years (see chart 1 below).
In our view, the core dental segment represents a higher-quality, recurring revenue stream compared to the volatile diagnostics business. Given the non-discretionary nature of dental healthcare, these revenues provide significant visibility and resilience over the last 5 years (see chart 1 below).
Looking ahead, we expect the group’s revenue to trend higher, aided by the group’s M&A-driven strategy to scale significantly in the region, especially in the Johor-Singapore Special Economic Zone. Crucially for bondholders, Q&M employs a disciplined, partnership-driven M&A model. By utilising a mix of cash and equity for acquisitions (the group pays a combination of cash and shares to selling clinics), management avoids the “debt-trap” often seen in rapid roll-up strategies. We like how this prudent capital allocation ensures that regional scaling does not compromise the group’s credit profile, maintaining a healthy balance between growth and balance sheet stability.
Chart 1: Resilient revenue growth with an increasing shift towards core dental business
Earnings are resilient with scope for improvement
Q&M’s revenue growth is accompanied by increasing profitability. For FY25, total profit after tax and minority interests (PATMI) for the core dental business increased 16% YoY to S$30.4 million, which mainly reflects Aoxin Q&M’s dental swing to profitability. On a normalised basis, stripping away one-off items, the group’s overall PATMI remained flat at S$17.0 million (FY24: S$16.9 million), underscoring a consistent earnings floor despite regional macro headwinds.
However, operational performance as measured by EBITDA came in flat at S$42.4 million for FY25 (FY24: S$42.4 million). EBITDA remained flat despite a surge in PATMI for the core dental business due to temporary margin pressure from higher regional operating costs and the deliberate cessation of high-margin (but volatile) laboratory revenue. That said, we are not overly concerned by this flat performance; management recognises this margin pressure and is pivoting its 2026 strategy towards aggressive cost management to be more effective in converting topline growth to operational profits.
Management is also actively “trimming the fat” by closing underperforming clinics to focus resources on high-yield locations. To enhance productivity within its existing 100+ outlets, Q&M is upskilling its general practitioners to handle high-margin speciality work, such as implants and orthodontics, through the Q&M Dental college. This is being paired with the rollout of advanced digital scanners to increase patient throughput per chair. We believe these measures being pursued by management should lead to better cost management, directly benefiting the bottom line and bolstering the group’s debt servicing capacity.
Aoxin Integration: Turning the Corner in China
The integration of Aoxin Q&M has officially shifted from “execution risk” to “profit contributor”, marking a pivotal milestone in the group’s regional strategy. In FY25, Aoxin achieved a significant operational turnaround, swinging from an RMB 8.0 million loss in the prior year to a net profit of RMB 6.9 million. This reversal was underpinned by strict cost discipline and a strategic “clean up” of legacy administrative overheads. Furthermore, the full resolution and repayment of regulatory overclaims in China have provided the group with a transparent, de-risked platform for future growth.
With Aoxin and other operations in China now contributing roughly 9% of the group’s consolidated revenue, this arm has evolved into a self-sustaining subsidiary that provides Q&M with a direct, scalable platform in one of the world’s largest dental markets. Importantly, for bondholders, this successful turnaround serves as a powerful “proof of concept” for the group’s M&A implementation capabilities. It reinforces our confidence in management’s ability to identify, acquire, and successfully integrate regional partners into a profitable, unified ecosystem.
Credit highlights:
Q&M’s credit profile continues its multi-year deleveraging trend. As seen in Table 1 below, its net gearing (net debt/equity) currently stands at 21% (FY24: 36%), while net debt / EBITDA moderated to 0.70x (FY24: 1.03x). The deleveraging is mainly due to improved operating performance posted by the group.
Q&M continues to have a well-staggered debt maturity profile: near-term obligations are minimal, with only S$0.7 million due within the next 12 months. The bulk of the group’s debt, S$142.7 million, is due after 12 months. Of the S$142.7 million, S$130 million is represented by the group’s 2028 bonds outstanding (our recommendation). We continue to think that Q&M remains in a comfortable position to meet its interest and debt obligations, given its total available liquidity and cash flow generated from operations. While its current interest coverage ratio (ICR), defined as EBITDA / finance costs, moderated to 3.8x in FY25 due to the higher finance costs of the bond issuance, it remains comfortably above the 1.75x bank covenant. We expect this coverage to strengthen as the group’s cost management initiatives come to fruition over time.
Liquidity remains a core strength for Q&M. The group carries S$117.1 million of cash on hand, which comfortably covers the near-term S$0.7 million obligation due within the next 12 months. While the remaining S$142.7 million due after 12 months is not fully covered by cash on hand, the group’s consistent track record of generating positive operating cash flow, averaging S$35.9 million annually (see chart 2 below), provides a clear path to organic debt retirement.
Overall, we view the Q&M credit story as one of improving quality and lower leverage. While interest costs have risen following the 2028 bond issuance, the group’s demonstrated ability to produce recurring cash flow from its core clinics sufficiently mitigates any concerns over the moderated ICR. Looking ahead, we expect the credit profile to remain stable, with potential for further upside as its regional expansion plays out and AI-driven productivity gains begin to contribute to the bottom line.
Table 1: Improving leverage, with decent coverage
|
Metric |
31 Dec 2021 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2024 |
31 Dec 2025 |
|
Net leverage (net debt/equity) |
35% |
44% |
44% |
36% |
21% |
|
Net debt / EBITDA |
0.57x |
1.29x |
1.25x |
1.03x |
0.70x |
|
EBITDA / Finance costs (ICR) |
20.9x |
9.0x |
6.5x |
7.1x |
3.8x |
|
Data as of 31 December 2025 Source: Company data, iFAST compilations |
|||||
Chart 2: Even excluding the COVID bump, OCF has been resilient
Key risks:
M&A and Execution Risk
The successful turnaround of Aoxin Q&M in China serves as a critical “proof of concept” for this strategy. By transforming a loss-making associate into a profitable subsidiary, management has demonstrated its ability to navigate complex regulatory environments. Additionally, Q&M’s disciplined use of equity and cash for acquisitions balances growth ambitions with a decent credit profile.
Bond recommendation:
|
Issue |
Issuer |
Ask Price |
Years to Call |
Yield to Worst |
|
Q&M Dental Group |
101.40 |
2.35 |
3.30% |
|
|
Thomson Medical Group Ltd |
103.83 |
2.24 |
3.69% |
|
|
Singapore Medical Group Limited |
104.83 |
3.54 |
2.12% |
|
|
Hotel Properties Limited |
103.13 |
2.24 |
2.30% |
|
|
Vertex Venture Holdings Ltd |
102.40 |
2.40 |
2.26% |
|
|
GLL IHT Pte Ltd |
105.48 |
2.40 |
2.04% |
|
|
IREIT Global |
103.81 |
2.21 |
4.17% |
|
|
MoneyMax Treasure Pte. Ltd. |
102.00 |
2.65 |
4.20% |
|
|
Data as of 06 March 2026 Source: Bondsupermart, iFAST Compilations. |
||||
Overall, Q&M’s credit profile has improved since its last results update in August 2025. While the absolute borrowings have risen, the quality of the balance sheet is at its strongest in 5 years, underpinned by a S$117.1 million cash position and lean leverage ratios. While coverage has moderated, the ICR of 3.8x is still comfortably above its covenant requirement of 1.75x. Supported by robust cash flow from core operations and the successful turnaround of Aoxin, the group is well-positioned to maintain its credit profile. Looking ahead, we expect Q&M to maintain its decent credit profile, with further strengthening as new clinic acquisitions and AI-driven cost management begin to lift margins.
QNMSP 3.950% 10Jul2028 Corp (SGD) currently offers a yield to worst of 3.30%, with 2.35 years to mature. Within the healthcare credit space, we find these bonds more attractive than Thomson Medical Group, given Thomson’s higher relative leverage and lower top-line growth compared to Q&M. Compared to Singapore Medical Group, these bonds from Q&M offer a compelling 100+bps yield pickup owing to Singapore Medical Group’s stronger credit profile.
Against the broader market of similar tenors, these 2028 Q&M bonds generally offer an attractive 100bps yield pickup. While MoneyMax and IREIT Global offer higher yields, these carry idiosyncratic risks: MoneyMax’s operating performance is highly tied to gold prices, and IREIT faces specific transition headwinds regarding its Berlin Campus.
In all, we continue to like these 2028 bonds issued by Q&M Dental. We think they provide a decent yield pickup compared to other similar tenor issues for an issuer with an improving credit profile.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in QNMSP 3.950% 10Jul2028 Corp (SGD), TMGSP 5.500% 31May2028 Corp (SGD) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.
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