February 8th, 2021 | 07:30 CET
Fresenius, Fresenius Medical Care, Q&M Dental: Healthy returns await here
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Fresenius or Fresenius Medical Care?
If you're a casual investor looking at the price lists of German stocks, you're bound to notice Fresenius and Fresenius Medical Care. But what do these two companies do? In a nutshell, Fresenius is the parent Company and has a stake in Fresenius Medical Care. While Fresenius also operates hospitals and offers other products, such as infusions or nutrition, Fresenius Medical Care focuses entirely on dialysis. This form of blood washing helps patients with weak kidneys stay healthy and buy time until the kidneys can resume their function or a donor kidney can be transplanted. In addition to dialysis as a service, Fresenius Medical Care also offers dialysis products.
Even though the parent Company Fresenius profits about 50% from the dialysis business, the specialized subsidiary is more promising on the stock market. While Fresenius Medical Care effectively occupies a niche and can profit from trends such as aging society in the long term, Fresenius has to contend with hospital services and infusion. These two business segments are not doing well at the moment. During the peak phase of the pandemic, postponed surgery appointments also had a negative impact.
Fresenius Medical Care: Interesting at the three-year low despite everything
Comparing the shares of Fresenius and Fresenius Medical Care, the parent Company currently looks more favorably valued. Since Fresenius also has a stake of around 50% in the strong dialysis subsidiary, the share, which is considered boring, is worth considering for long-term investors. The services and infusion business has weakened recently, but this can be remedied. In the long term, Fresenius should be able to benefit from rising spending in the healthcare sector. Fresenius Medical Care recently shocked the market with a weak earnings forecast for 2021, which sent the stock on a downward slide close to its three-year low. However, those who take a long-term view can analyze this stock in more detail.
Q & M Dental: Asia invests in beautiful teeth
A share that is hardly known in Germany but has an attractive business model is Q & M Dental. The operator of 114 dental practices, five clinics and three distribution companies for medical products in Singapore, Malaysia and China already made a virtue out of necessity in the summer of 2020 and invested in a corona tests manufacturer. While the government supported the Company because of the collapsed business with dental treatments, Q&M pushed test procedures and is now a licensed partner of the Ministry of Health in Singapore for corona tests.
The go-getting management team also has its sights set on other regions of the world. Since Q & M Dental had already planned to expand even more in China and Malaysia before the pandemic, it has growth potential. A study by KGI, an Asian analyst firm, gave the stock a potential upside of nearly 20% at the end of November. Given Q & M's stable business in Singapore, the side earnings with Corona tests, and the expansion fantasy, the stock could be a welcome alternative for investors who find Asian healthcare stocks exciting.
Conflict of interest
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