Modern Dental Group (3600.HK)
Global provider of low cost dental prosthetics
Disclaimer: Healthy Stock Picks uses information sources believed to be reliable, but their accuracy cannot be guaranteed. The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. You are advised to discuss your investment options with your financial advisers and to understand whether any investment is suitable for your specific needs. From time to time, I may have positions in the securities covered in the articles on this website. Full disclosure: I do hold a position in Modern Dental Group when publishing this article. Note that this is a disclosure and not a recommendation to buy or sell.
Modern Dental Group (MDG) is a low cost dental laboratory company. In a very fragmented market the company is the largest global player in terms of labs and distribution network.
Riding on the tailwind of a larger elderly population in need of dental care, MDG has grown revenue with a 15% CAGR the past 10 years. Due to the HK bear market this non-cyclical high quality small cap can be bought at 2025 expected EV/EBITDA below 6x and P/E below 10x including an expected forward dividend above 3.5%.
With improving margins, reinvestment of it’s strong cash-flow and bolt on acquisitions MDG is likely to outgrow the market as a strong compounder stock. The past years the stock has very significantly outperformed the Hang Seng Index.
A new clear aligner product which can be pushed in its distribution network is a free call option on the upside. This is a huge market opportunity with global market valued at 6bn USD and growing fast. Production line is now fully automated to support larger volumes and 510k FDA received already in 2021.
Read the full company write up in the slide deck below.
So nice to see that you can focus on healthcare field, which is my favorite too. Thanks for sharing your insights!
Very informative! What made MDG’s market share in Hong Kong as high as 55%, and how long had it lasted, while other parts of the world demonstrate very segmented markets structure?