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Potential listing of Acumen on Nasdaq may boost Q&M and Aoxin Q&M: UOBKH

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Acumen's potential listing on Nasdaq bodes well for both Aoxin Q&M and Q&M Dental.

Acumen Diagnostics, a medical technology company that operates two laboratories in Singapore to provide swabbing and Covid-19 polymerase chain reaction (PCR) tests services is intending to list on the Nasdaq stock exchange in New York. Furthermore, Acumen has appointed an advisors to assist with the listing evaluation and all relevant preparatory work including the selection of professional advisors and underwriting banks.

Acumen is 50% owned by Q&M Dental Group and 49% owned by Q&M’s Chinese dental business Aoxin Q&M. If this listing goes through, Acumen would be Q&M’s second spin-off, with Aoxin Q&M being its first spin-off listing on the Catalist Board of Singapore Exchange (SGX) back in 2017.

The reasons for choosing Nasdaq is because it is one of the most well-known listing platforms in the world. Nasdaq is known for its technology, innovation, and it is home to digital, biotechnology, and other cutting edge companies.

In addition, Acumen believes that having a listing status in a leading global capital market of the status of Nasdaq is beneficial as this provides Acumen with ready access to the world's largest economy, an expanded investor base and additional sources of financing. This proposed listing is also an excellent opportunity for Aoxin to enhance its corporate profile as it seeks to further expand its business.

The way UOB Kay Hian sees it, this move would be a positive to both Aoxin Q&M and Q&M.

For Aoxin Q&M, which owns 49% of Acumen, UOBKH has kept its “buy” call on the stock with a target price of 37 cents.

According to analyst John Cheong, this deal could unlock a huge value with more than 70% for Aoxin Q&M. “Our base-case estimate using 22 times FY2021 P/E for Acumen, based on Q&M Dental’s historical mean P/E, will unlock value of $216 million or 42 cents per share for Aoxin Q&M,” says Cheong.

Compared to current market cap of Aoxin Q&M at $127 million or 25 cents per share, he estimates that Aoxin Q&M will be able to enjoy more than 70% upside in value accretion upon successful of listing, with continued ownership of the China dental business.

Meanwhile, Cheong also has a “buy” recommendation on parent company Q&M with a target price of 78 cents. He estimates that Q&M will be able to see a 40% upside upon successful listing for Acumen on Nasdaq.

As at 12.45pm, shares in Aoxin Q&M are trading at 25 cents or 1.6 times FY2021 book.

Photo: Acumen Diagnostics

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