Modern Dental Group (3600.HK)
Global provider of low cost dental prosthetics
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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!
What did you make of the 2024 results?
The company seems to be taking sensible steps to diversify geographic risk, and the ecosystem strategy seems to be progressing (albeit this is yet to translate to material growth, which remains modest).
But having held this stock for around 3 years, during which time it hasn't traded above 10x earnings, i would like to see some more shareholder returns...