CICC initiates coverage on Modern Dental Group (03600.HK) with an “Outperform” rating and a target price of HK$10.00, highlighting three key drivers. 1) Digitalization-led consolidation: intraoral scanning enables standardized cases to be processed centrally, supporting faster turnover and efficiency; the global market scale for dental prosthetics was ~US$24.3bn in 2025 with a low CR3 of 10.7%. 2) Global expansion through M&A: From IPO stage to 1H26, the company completed 15+ acquisitions, and Hexa Ceram contributed HK$216m revenue in 2025 (c. 60% of Group revenue growth). 3) Profit upside unlocked by centralized order and digital penetration: digital cases were ~35%–40% of volume in 2025, while digital cases processed at Asian production bases grew from 581k (2023) to 1.039m (2025) (CAGR ~33.7%) alongside a decline in staff cost ratio (48.0% to 43.6%), digital transformation is expected to drive profit growth ahead of revenue.
CICC further notes that the rising penetration of intraoral scanning enables more cases to be captured locally, then transferred to Asian production bases for centralized design and production, creating a new window for efficiency gains in Modern Dental Group. CICC believes that there are multiple catalysts ahead: digital case volume growth beyond expectations, demand recovery in Europe, the US, and Southeast Asia exceeding expectations, and better-than-expected M&A integration alongside improved capacity utilization. CICC projects EPS of HK$0.83 (2026) and HK$1.07 (2027), implying a 29.3% CAGR for 2025–2027E. The current share price implies P/E of 9.6x (2026E) and 7.4x (2027E). CICC initiates an “Outperform” rating for the company with a target price of HK$10.0, based on a 2027E P/E of 9.3x, implying ~25.5% upside.
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