Up for grabs: Q&M offers 1-for-5 rights issue

It’s an attractive 140.5 million shares at $0.10/rights share.

Dental group Q&M has announced a 1-for-5 rights issue to raise $14.1 million. Major shareholders Quan Min Holdings and the CEO Dr Ng hold a combined stake of 65.2% and have agreed to take up their rights entitlements and fully subscribe to their allotments.

A report by Maybank indicates that the rights issue price is very attractive given the stock’s outperformance and the expected positive contributions from Q&M’s China acquisitions. The major shareholders’ decision to fully subscribe for their allotments is also a strong endorsement of the stock. Maybank expects the funds raised to be used to complete 2 other acquisitions (Aoxin and Aidite).

The full year impact from the acquisitions will be felt only in FY15E, and more EPS-accretive acquisitions are expected in the future, beyond the 6 announced acquisitions (5 in China, 1 in Singapore).