MODERN DENTAL: A leader in international denture processing, its performance has reached an inflection point. The global denture market is over 30 billion US dollars. China is a major denture exporter, and the market is growing rapidly. Under the aging trend, rigid demand for dentures will continue to increase treatment penetration. MODERN DENTAL began with denture processing rooms, and continued mergers and acquisitions to achieve an international layout in Europe, North America, Australia and other regions. Overseas revenue accounts for nearly 80%, and market share in many countries (Hong Kong's market share exceeds 50%). The COVID-19 pandemic has accelerated the elimination of small laboratories, further increasing the company's market share. After years of global mergers and acquisitions, compounded by digital trends, the company's profitability continued to improve and its performance reversed at the bottom. The future is worth looking forward to.
Business model: “inheritance+innovation”! Entering a new stage of development of denture processing is a traditional “craft job”, but achieving “large-scale and personalized” customized production and service requires strong refined operation capabilities. The company occupies high-end markets at home and abroad with the advantage of “low cost+high quality control”. The commissioning of factories in Dongguan and later Vietnam will increase gross profit margin. The digital trend has brought new development opportunities. In 2016, the company established four major digital production centers around the world; reached business cooperation with many well-known brands (Straumann, Altron, Baibo, etc.) to continuously improve terminal coverage and services. The company's new generation of young successors has a highly educated background in dentistry, and is expected to usher in new development in an era where traditional business and digital opportunities coexist.
Invisible Orthodontics: The Age of Smiles, Rookies Entering the World
The penetration rate of invisible orthodontics in China is low, and the estimated market size is close to 30 billion US dollars in 2030. The “material+design+brand” of invisible braces products are indispensable, and leading companies have a strong first-mover advantage. MODERN DENTAL TrioClear (TrioClear) was launched in Hong Kong, Australia, and Europe in 2020. It uses a unique 3-step solution and combines exclusive TrioDim Force technology to reduce the use of accessories and save diagnosis and treatment time. It is expected to use the existing network of more than 20,000 overseas dentists to achieve cross-selling, creating another “MODERN DENTAL” with imagination to develop imagination
Risk warning: The repeated COVID-19 pandemic has caused overseas business to fall short of expectations
Investment advice: denture processing leader, invisible orthodontic rookie, recommended to “buy”
Net profit from parent to parent is estimated to be HK$4.02/474/545 million for 2021-23, and the current stock price corresponds to PE 20/17/14X. Based on absolute valuation and relative valuation, the company's reasonable stock price is HK$10.73 to HK$12.24. Compared with the current stock price of HK$8.17 (2021-05-31), there is a premium of 31%-50%. The valuation is extremely cost-effective, covered for the first time, and given a “buy” rating.