Rating: BUY (Initiation)
Target price: HKD18.92
Share price (9 Aug): HKD6.73
Market Cap (HKDm): 6,440.2
Up/downside: 181.1%
We initiate coverage with a BUY call and PT of HKD18.92 (181.1% upside potential). Via M&A, Modern Dental has established an exclusive global sales and distribution network with more than 100 subsidiaries, over 20 brands and more than 30,000 global customers. Its leading market share in Europe, North America, Greater China, Australia and other major markets.
Strategic M&A and capacity expansion brings growth potential
Modern Dental is the world’s leading supplier of denture equipment. It specializes in denture customization, including fixed and removable denture equipment, and other equipment. Through years of strategic M&As, it has established an exclusive global sales and distribution network, with more than 100 subsidiaries, more than 20 brands, and more than 30,000 global customers. It has a leading market share in Europe, North America, Greater China, Australia and other major markets.
In October 2019, phase I of its Dongguan production base project was officially put into operation, covering 16,000 sqm, expanding production and operational capacity. In the pandemic impact, 2H20 performance recovered and grew to a net profit of HKD247m, a substantial yoy increase of 236.3%. 2H20 gross profit margin increased to 52.2% and net profit margin increased to 16.2%. The company reported 1H21 revenue of about HKD1.47bn, up 63.9% yoy. Greater China revenue came to about HKD329m, a substantial increase of 73.1% yoy. With the gradual completion and commissioning of the phase II project base and Vietnam production base, capacity would increase, adding further momentum in performance growth.
C19 speeds domestic market integration; opportunities for digitalization pioneer
There is a large number of domestic denture production companies, mostly small-scale regional technicians, so the industry concentration is low. The Covid-19 pandemic has accelerated the elimination of small denture processing companies, and social distancing measures have increased market attention to digital technology. Modern Dental, as industry leader, has significant advantages in the number of technicians, tech level, digital development level and customer channels, etc. It began to use CAD/CAM technology in 2007, and currently has four digital production centers. It has a centralized network of digital processes and equipment. It has the most oral internal scanning applications in the market. Modern Dental would benefit from the opportunities that come with market integration and digital development, increasing its market share and customer stickiness, and entrenching its industry leadership.
Invisible orthodontics: exclusive advantage and channel resources boost volume
In 2020, TrioClear, the company’s invisible orthodontic product, was launched in Hong Kong, Australia and Europe. TrioClear uses a unique three-step orthodontic method to replace three layers of braces with progressive thickness during patient treatment. It enables teeth to move in a gradual and predictable way, providing a comfortable wearing experience. Its exclusive TrioDim Force technology reduces the use of accessories and saves time for dentists. It covers more than 20,000 dentists worldwide, and with the help of stable customer channels, we expect TrioClear to expand rapidly.
Valuation and risks
We expect the company to benefit from the opportunities of accelerated market integration due to a strong recovery momentum. We estimate revenue will reach HKD2.99bn/3.71bn/ 4.48bn in 2021/22/23E and net profit will reach HKD454m/563m/706m. Relative to a peer PE of 40x in 2021E, we value Modern Dental at HKD18.17bn and derive a price target of HKD18.92. Risks include: global economic and transnational business risks; M&A uncertainty risks; concentration of production facilities risks; and risks related to deviation arising from different market valuation systems.
免责声明(DISCLAIMER):
此文件仅发给指定收件人或机构。其内容可能包含某种享有法律特权或者需要保密的信息。对于任何未经本公司授权而对本文件所载内容进行使用、披露、分发、变更之行为及由此产生的后果,天风国际证券集团有限公司及其联属公司和附属公司(「天风集团」)概不承担任何责任。如您并非此文件的指定收件人或机构,请立即通知天风集团,并立即销毁此文件。谢谢合作。
This message is intended only for the individual or entity to which it is addressed. It may contain legally privileged and/or confidential information. TF International Securities Group Limited and its affiliates and subsidiaries (「TF Group」) does not accept liability for the unauthorized use, disclosure, distribution and/or alteration of any information it contains or the consequences thereof. If you are not an intended recipient, please inform TF Group and destroy this message immediately. Thank you.
評級:買入(啟動)
目標價:港幣18.92元
股價(8月9日):港幣6.73元
市值(港幣):6440.2
上漲/下跌:181.1%
我們以買入通知和港幣18.92元(181.1%的上升潛力)開始承保。通過併購,現代牙科已經建立了獨家的全球銷售和分銷網絡,擁有100多個子公司,20多個品牌和30,000多個全球客户。其市場佔有率領先於歐洲、北美、大中華區中國、澳大利亞等主要市場。
戰略併購和產能擴張帶來增長潛力
現代牙科是全球領先的義齒設備供應商。它專門從事義齒定製,包括固定和可拆卸義齒設備,以及其他設備。通過多年的戰略併購,它已經建立了獨家的全球銷售和分銷網絡,擁有100多個子公司,20多個品牌,全球客户超過3萬人。在歐洲、北美、大中國、澳大利亞等主要市場佔有領先的市場份額。
2019年10月,其東莞生產基地一期項目正式投產,佔地1.6萬平方米,擴大了生產經營能力。在疫情影響下,2H20業績有所回升,並增長至淨利潤港幣2.47億元,同比大幅增長236.3%。20H20年度毛利率增至52.2%,淨利潤率增至16.2%。該公司公佈2011年第一季度營收約14.7億港元,同比增長63.9%。中國的收入約為港幣3.29億元,按年大幅增長73.1%。隨着二期項目基地和越南生產基地的逐步建成和投產,產能將會增加,為業績增長增添進一步的動力。
C19加快國內市場整合;數字化先鋒機遇
國內義齒生產企業數量眾多,多為小規模區域技師,行業集中度低。新冠肺炎的大流行加速了小型義齒加工公司的淘汰,社會疏遠措施增加了市場對數字技術的關注。現代牙科作為行業領先者,在技術人員數量、技術水平、數字化發展水平和客户渠道等方面具有顯著優勢,於2007年開始使用CAD/CAM技術,目前擁有四個數字化生產中心。它擁有一個數字流程和設備的中央網絡。它擁有市場上最多的口腔內部掃描應用程序。現代牙科公司將受益於市場整合和數字發展帶來的機遇,增加其市場份額和客户粘性,並鞏固其行業領先地位。
隱形正畸:獨家優勢和渠道資源提振銷量
2020年,該公司的隱形正畸產品TrioClear在香港、澳大利亞和歐洲推出。TrioClear使用獨特的三步正畸方法,在患者治療期間更換三層逐漸增厚的牙套。它使牙齒能夠以漸進和可預測的方式移動,提供舒適的佩戴體驗。其獨有的TrioDim Force技術減少了配件的使用,為牙醫節省了時間。它覆蓋了全球20,000多名牙醫,在穩定的客户渠道的幫助下,我們預計TrioClear將迅速擴張。
估值和風險
我們預計,由於強勁的復甦勢頭,公司將受益於市場整合加速的機遇。我們預計2021/22/23年收入將達到29.9億港元/37.1億港元/44.8億港元,淨利潤將達到4.54億港元/5.63億港元/7.06億港元。相對於2021年40倍的同行市盈率,我們對現代牙科的估值為181.7億港元,並得出18.92港元的目標價。風險包括:全球經濟和跨國商業風險;併購不確定性風險;生產設施集中風險;以及與不同市場估值體系產生的偏差相關的風險。
免責聲明(免責聲明):
此文件僅發給指定收件人或機構.其內容可能包含某種享有法律特權或者需要保密的信息.對於任何未經本公司授權而對本文件所載內容進行使用、披露、分發、變更之行為及由此產生的後果,天風國際證券集團有限公司及其聯屬公司和附屬公司(“天風集團”)概不承擔任何責任.如您並非此文件的指定收件人或機構,請立即通知天風集團,並立即銷燬此文件.謝謝合作.
此消息僅針對其收件人個人或實體。它可能包含法律特權和/或機密信息。TF國際證券集團有限公司及其聯屬公司及附屬公司(“TF Group”)不對其所載任何資料的未經授權使用、披露、分發及/或更改或由此產生的後果承擔任何責任。如果您不是預期的收件人,請通知TF集團並立即銷燬此郵件。謝謝。