PRESENTED BY
PRESENTED BY
Long Position in a Hong Kong Mid-/Small-Cap Company
Long Position in a Hong Kong Mid-/Small-Cap Company
Long Position in a Hong Kong Mid-/Small-Cap Company
By: Ginkgo Capital Co., Limited
By: Ginkgo Capital Co., Limited
Trade direction
Long 3600.HK / Short HSI
Long 3600.HK / Short HSI
Holding period
12–24 months
12–24 months
Date
30 June 2026
30 June 2026
Current allocation
HK$1.0m long / HK$0.83m short
HK$1.0m long / HK$0.83m short
Target range
~9x P/E
~9x P/E
Implied upside
Excess vs HSI
Excess vs HSI
01 · Executive summary
01 · Executive summary
Modern Dental is a global dental prosthetics provider with products including crowns, bridges, dentures, orthodontic devices, clear aligners, sports guards and anti-snoring devices. The recommended trade is long Modern Dental Group and short Hang Seng Index exposure. For a HK$1.0m model position, we would buy HK$1.0m of 3600.HK and short approximately HK$830k notional HSI exposure, using a 0.83x hedge ratio from our internal 5-year monthly beta study.
The investment case is anchored in the company’s 2025 full-year results. In 2025, Modern Dental delivered record revenue, EBITDA and net profit: revenue rose 11.1% to approximately HK$3,736.5m, EBITDA rose 32.4% to approximately HK$938.1m, and net profit rose 47.7% to approximately HK$601.2m. Gross profit margin was approximately 55.8%, while digital solution cases exceeded one million and increased 32.7% year-on-year. The 2026 first-quarter operating update is supportive rather than central: it shows that revenue and digital case growth continued into the following reporting period.
Our contrarian view is that the market still prices Modern Dental as a small-cap Hong Kong-listed manufacturer, while its economics increasingly resemble a global dental outsourcing and digital workflow platform. On our estimates, the stock trades at roughly 9x earnings and mid-single-digit EV/EBITDA, with high-teens return on equity. We believe the combination of earnings growth, margin expansion, digital adoption, dividends and buybacks can generate excess return versus the Hang Seng Index over 12–24 months.
Modern Dental is a global dental prosthetics provider with products including crowns, bridges, dentures, orthodontic devices, clear aligners, sports guards and anti-snoring devices. The recommended trade is long Modern Dental Group and short Hang Seng Index exposure. For a HK$1.0m model position, we would buy HK$1.0m of 3600.HK and short approximately HK$830k notional HSI exposure, using a 0.83x hedge ratio from our internal 5-year monthly beta study.
The investment case is anchored in the company’s 2025 full-year results. In 2025, Modern Dental delivered record revenue, EBITDA and net profit: revenue rose 11.1% to approximately HK$3,736.5m, EBITDA rose 32.4% to approximately HK$938.1m, and net profit rose 47.7% to approximately HK$601.2m. Gross profit margin was approximately 55.8%, while digital solution cases exceeded one million and increased 32.7% year-on-year. The 2026 first-quarter operating update is supportive rather than central: it shows that revenue and digital case growth continued into the following reporting period.
Our contrarian view is that the market still prices Modern Dental as a small-cap Hong Kong-listed manufacturer, while its economics increasingly resemble a global dental outsourcing and digital workflow platform. On our estimates, the stock trades at roughly 9x earnings and mid-single-digit EV/EBITDA, with high-teens return on equity. We believe the combination of earnings growth, margin expansion, digital adoption, dividends and buybacks can generate excess return versus the Hang Seng Index over 12–24 months.
02 · Investment Thesis
02 · Investment Thesis
Modern Dental is listed in Hong Kong, but its business drivers are global. The group operates brands across Western Europe, China, Hong Kong, the United States, Australia and New Zealand, Singapore, Taiwan, Malaysia and Thailand, with more than 80 service centers in over 28 countries serving more than 35,000 customers. This creates a mismatch between public-market perception and operating reality: the equity is treated like a local small-cap, while the business is a global dental prosthetics platform.
The first pillar is 2025 earnings quality. Revenue growth of 11.1% translated into EBITDA growth of 32.4% and net profit growth of 47.7%, indicating operating leverage and efficiency improvement rather than merely top-line recovery. Gross profit increased 15.9% to approximately HK$2,085.0m, and gross margin reached approximately 55.8%. This gives us confidence that digitalization and operating discipline are already visible in reported financials.
The second pillar is digitalization. Dental prosthetics is moving from manual workflows toward digital scanning, design, manufacturing and fulfillment. In 2025, Modern Dental recorded approximately 1,039,000 digital solution cases from its Mainland China, Thailand and Vietnam facilities, up 32.7% year-on-year, driven by continued customer adoption of intra-oral scanners. Digital workflows should improve production efficiency, customer stickiness and scalability over time.
The third pillar is capital return and per-share value creation. Basic EPS increased 47.5% to approximately HK63.7 cents in 2025, and the board recommended a final dividend of HK15.0 cents per ordinary share. The company also recorded multiple buyback-related disclosures in 2026. While capital return is not the sole thesis, it reinforces alignment and provides carry while investors wait for recognition of the company’s improved earnings profile.
We express the idea as a market-hedged relative-value trade: long 3600.HK and short HSI exposure at 0.83x notional. The hedge is not a bearish call on Hong Kong equities; it is designed to isolate Modern Dental’s company-specific drivers—digitalization, earnings growth, margin resilience, capital return and valuation normalization.
Modern Dental is listed in Hong Kong, but its business drivers are global. The group operates brands across Western Europe, China, Hong Kong, the United States, Australia and New Zealand, Singapore, Taiwan, Malaysia and Thailand, with more than 80 service centers in over 28 countries serving more than 35,000 customers. This creates a mismatch between public-market perception and operating reality: the equity is treated like a local small-cap, while the business is a global dental prosthetics platform.
The first pillar is 2025 earnings quality. Revenue growth of 11.1% translated into EBITDA growth of 32.4% and net profit growth of 47.7%, indicating operating leverage and efficiency improvement rather than merely top-line recovery. Gross profit increased 15.9% to approximately HK$2,085.0m, and gross margin reached approximately 55.8%. This gives us confidence that digitalization and operating discipline are already visible in reported financials.
The second pillar is digitalization. Dental prosthetics is moving from manual workflows toward digital scanning, design, manufacturing and fulfillment. In 2025, Modern Dental recorded approximately 1,039,000 digital solution cases from its Mainland China, Thailand and Vietnam facilities, up 32.7% year-on-year, driven by continued customer adoption of intra-oral scanners. Digital workflows should improve production efficiency, customer stickiness and scalability over time.
The third pillar is capital return and per-share value creation. Basic EPS increased 47.5% to approximately HK63.7 cents in 2025, and the board recommended a final dividend of HK15.0 cents per ordinary share. The company also recorded multiple buyback-related disclosures in 2026. While capital return is not the sole thesis, it reinforces alignment and provides carry while investors wait for recognition of the company’s improved earnings profile.
We express the idea as a market-hedged relative-value trade: long 3600.HK and short HSI exposure at 0.83x notional. The hedge is not a bearish call on Hong Kong equities; it is designed to isolate Modern Dental’s company-specific drivers—digitalization, earnings growth, margin resilience, capital return and valuation normalization.
03 · Valuation & Catalysts
03 · Valuation & Catalysts
Our valuation framework uses earnings, cash generation and comparable medical device / outsourced healthcare service multiples. At the current share price, Modern Dental remains valued at a discount to what we believe is appropriate for a profitable global dental prosthetics platform with growing digital penetration. The market appears to be applying a small-cap Hong Kong discount without fully recognizing the 2025 step-change in profitability.
The first catalyst is confirmation that 2025 was not a one-off. The 2025 annual results showed record revenue, EBITDA and net profit, with EBITDA and net profit growing substantially faster than revenue. The 1Q26 operating update provides useful supporting evidence: quarterly revenue rose 12.1% year-on-year to approximately HK$987.5m, total sales volume rose 4.0% to approximately 720,000 cases, digital solution cases increased 24.6%, and average selling price increased 7.2% to HK$1,273 per case.
The second catalyst is continued digital penetration. If digital solution cases continue to grow faster than total volumes, investors should increasingly view Modern Dental as a workflow modernization beneficiary rather than a traditional manufacturer. The 2025 digital case count above one million is important because it shows digitalization at scale.
The third catalyst is margin and mix validation. Strong gross margin, faster EBITDA growth and faster net profit growth in 2025 suggest that efficiency gains are already flowing through. Future results should be monitored for confirmation that regional and product mix remain supportive.
The fourth catalyst is capital return. The dividend, EPS growth and buybacks can support total return and highlight management’s focus on per-share value. Over 12–24 months, expected return should come from earnings growth, dividends / buybacks and potential multiple normalization.
Our valuation framework uses earnings, cash generation and comparable medical device / outsourced healthcare service multiples. At the current share price, Modern Dental remains valued at a discount to what we believe is appropriate for a profitable global dental prosthetics platform with growing digital penetration. The market appears to be applying a small-cap Hong Kong discount without fully recognizing the 2025 step-change in profitability.
The first catalyst is confirmation that 2025 was not a one-off. The 2025 annual results showed record revenue, EBITDA and net profit, with EBITDA and net profit growing substantially faster than revenue. The 1Q26 operating update provides useful supporting evidence: quarterly revenue rose 12.1% year-on-year to approximately HK$987.5m, total sales volume rose 4.0% to approximately 720,000 cases, digital solution cases increased 24.6%, and average selling price increased 7.2% to HK$1,273 per case.
The second catalyst is continued digital penetration. If digital solution cases continue to grow faster than total volumes, investors should increasingly view Modern Dental as a workflow modernization beneficiary rather than a traditional manufacturer. The 2025 digital case count above one million is important because it shows digitalization at scale.
The third catalyst is margin and mix validation. Strong gross margin, faster EBITDA growth and faster net profit growth in 2025 suggest that efficiency gains are already flowing through. Future results should be monitored for confirmation that regional and product mix remain supportive.
The fourth catalyst is capital return. The dividend, EPS growth and buybacks can support total return and highlight management’s focus on per-share value. Over 12–24 months, expected return should come from earnings growth, dividends / buybacks and potential multiple normalization.
04 · Risks & Mitigation
04 · Risks & Mitigation
Key risks are: (1) weaker global dental demand, particularly for discretionary procedures; (2) margin disappointment if pricing pressure offsets digital efficiency or favorable mix; (3) hedge basis risk, as HSI is not a perfect match for Modern Dental’s global revenue exposure; and (4) liquidity and execution risk in a small- to mid-cap Hong Kong stock.
Mitigation is built into both research process and portfolio construction. We track annual and interim revenue, gross margin, EBITDA, net profit, EPS, dividend policy, digital solution cases, regional mix and capital return disclosures. The 0.83x HSI short reduces broad Hong Kong market beta, while position size should be calibrated against average daily trading value and fund-level liquidity limits. We would reduce or exit if digital case growth slows materially, margins reverse, valuation re-rates without earnings confirmation, or liquidity deteriorates.
Key risks are: (1) weaker global dental demand, particularly for discretionary procedures; (2) margin disappointment if pricing pressure offsets digital efficiency or favorable mix; (3) hedge basis risk, as HSI is not a perfect match for Modern Dental’s global revenue exposure; and (4) liquidity and execution risk in a small- to mid-cap Hong Kong stock.
Mitigation is built into both research process and portfolio construction. We track annual and interim revenue, gross margin, EBITDA, net profit, EPS, dividend policy, digital solution cases, regional mix and capital return disclosures. The 0.83x HSI short reduces broad Hong Kong market beta, while position size should be calibrated against average daily trading value and fund-level liquidity limits. We would reduce or exit if digital case growth slows materially, margins reverse, valuation re-rates without earnings confirmation, or liquidity deteriorates.
05 · Position Sizing & Portfolio Fit
05 · Position Sizing & Portfolio Fit
Model position: long HK$1.0m Modern Dental Group and short HK$830k notional Hang Seng Index exposure. This produces approximately HK$1.83m gross exposure and HK$0.17m residual net long notional exposure. The position is appropriate for an Asian equity long/short, absolute-return or alpha-focused portfolio seeking idiosyncratic healthcare / industrial compounder exposure with reduced market beta. Review cadence should follow annual results, interim results, operating updates, dividend actions and buyback disclosures.
Model position: long HK$1.0m Modern Dental Group and short HK$830k notional Hang Seng Index exposure. This produces approximately HK$1.83m gross exposure and HK$0.17m residual net long notional exposure. The position is appropriate for an Asian equity long/short, absolute-return or alpha-focused portfolio seeking idiosyncratic healthcare / industrial compounder exposure with reduced market beta. Review cadence should follow annual results, interim results, operating updates, dividend actions and buyback disclosures.
06 · Manager Skill Highlight
06 · Manager Skill Highlight
This idea demonstrates our ability to identify fundamental alpha and structure it with explicit risk control. The edge is not simply that Modern Dental is statistically cheap; it is that the market under-recognizes the quality of the 2025 earnings inflection, the scale of digital adoption, and the global nature of the business. Our process emphasizes measurable KPIs—revenue, EBITDA, net profit, EPS, digital solution case growth, margins and capital return—then expresses the thesis through a beta-adjusted long / short structure designed to isolate excess return versus the broader Hong Kong market.
This idea demonstrates our ability to identify fundamental alpha and structure it with explicit risk control. The edge is not simply that Modern Dental is statistically cheap; it is that the market under-recognizes the quality of the 2025 earnings inflection, the scale of digital adoption, and the global nature of the business. Our process emphasizes measurable KPIs—revenue, EBITDA, net profit, EPS, digital solution case growth, margins and capital return—then expresses the thesis through a beta-adjusted long / short structure designed to isolate excess return versus the broader Hong Kong market.
Conflicts Disclosure
Conflicts Disclosure
The manager and/or its affiliates may hold, trade, or intend to trade securities or derivatives related to Modern Dental Group Limited, Hang Seng Index futures, Hang Seng Index-linked ETFs, or other instruments referenced in this case study. The manager may also have positions that differ from the model portfolio.
This case study is for discussion and illustrative portfolio purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security or financial instrument. Information is based on public disclosures, company announcements, industry information and internal research believed to be reliable at the time of preparation, but no representation is made as to completeness or accuracy.
The proposed trade involves equity market risk, company-specific risk, liquidity risk, short-selling risk, derivative risk, basis risk, currency risk and potential loss of capital. The submitting firm confirms that, to the best of its knowledge, it holds all necessary licences, exemptions or regulatory permissions applicable to its business and that internal compliance approval has been obtained for this submission.
The manager and/or its affiliates may hold, trade, or intend to trade securities or derivatives related to Modern Dental Group Limited, Hang Seng Index futures, Hang Seng Index-linked ETFs, or other instruments referenced in this case study. The manager may also have positions that differ from the model portfolio.
This case study is for discussion and illustrative portfolio purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security or financial instrument. Information is based on public disclosures, company announcements, industry information and internal research believed to be reliable at the time of preparation, but no representation is made as to completeness or accuracy.
The proposed trade involves equity market risk, company-specific risk, liquidity risk, short-selling risk, derivative risk, basis risk, currency risk and potential loss of capital. The submitting firm confirms that, to the best of its knowledge, it holds all necessary licences, exemptions or regulatory permissions applicable to its business and that internal compliance approval has been obtained for this submission.
OPTIONAL EXhibit page
OPTIONAL EXhibit page
Portfolio Construction
Data Point
Interpretation
Long leg
Long leg
HK$1.0m 3600.HK
HK$1.0m 3600.HK
Core alpha source
Core alpha source
Short leg
Short leg
HK$830k HSI exposure
HK$830k HSI exposure
Broad market beta hedge
Broad market beta hedge
Hedge ratio
Hedge ratio
0.83×
0.83×
Internal 5-year monthly beta study
Internal 5-year monthly beta study
Gross / net exposure
Gross / net exposure
HK$1.83m gross / HK$0.17m net long
HK$1.83m gross / HK$0.17m net long
Market-hedged relative-value structure
Market-hedged relative-value structure
Holding period
Holding period
12–24 months
12–24 months
Medium-term alpha horizon
Medium-term alpha horizon
2025 Full-Year Results
Data Point
Why It Matters
Revenue
Revenue
HK$3,736.5m, +11.1% YoY
HK$3,736.5m, +11.1% YoY
Record revenue and scale growth
Record revenue and scale growth
Gross profit / margin
Gross profit / margin
HK$2,085.0m / 55.8%
HK$2,085.0m / 55.8%
High gross margin and operating quality
High gross margin and operating quality
EBITDA
EBITDA
HK$938.1m, +32.4% YoY
HK$938.1m, +32.4% YoY
Operating leverage and efficiency gains
Operating leverage and efficiency gains
Net profit
Net profit
HK$601.2m, +47.7% YoY
HK$601.2m, +47.7% YoY
Core earnings inflection
Core earnings inflection
Basic EPS / dividend
Basic EPS / dividend
HK$63.7c EPS; HK$15.0c final DPS
HK$63.7c EPS; HK$15.0c final DPS
Per-share value creation and cash return
Per-share value creation and cash return
Digital solution cases
Digital solution cases
~1,039,000 cases, +32.7% YoY
~1,039,000 cases, +32.7% YoY
Digitalization at scale
Digitalization at scale
1Q26 Supporting Indicators
Data Point
Role in Thesis
Revenue
Revenue
HK$987.5m, +12.1% YoY
HK$987.5m, +12.1% YoY
Supports continuation after 2025
Supports continuation after 2025
Sales volume
Sales volume
720,000 cases, +4.0% YoY
720,000 cases, +4.0% YoY
Positive demand signal
Positive demand signal
Digital solution cases
Digital solution cases
294,712 cases, +24.6% YoY
294,712 cases, +24.6% YoY
Digital growth remained strong
Digital growth remained strong
ASP
ASP
HK$1,273, +7.2% YoY
HK$1,273, +7.2% YoY
Positive pricing / currency / mix signal
Positive pricing / currency / mix signal
Valuation / Catalyst
Internal Estimate / Signal
Monitor
P/E
P/E
~9x
~9x
Discount to quality and global footprint
Discount to quality and global footprint
EV/EBITDA
EV/EBITDA
Mid-single-digit
Mid-single-digit
Recognition of digital optionality
Recognition of digital optionality
Capital return
Capital return
Dividend + buyback disclosures
Dividend + buyback disclosures
Per-share value creation
Per-share value creation
12–24 month catalyst
12–24 month catalyst
Relative re-rating
Relative re-rating
Market recognition as global dental platform
Market recognition as global dental platform
About Ginkgo capital co., ltd & wing yee weng
About Ginkgo capital co., ltd & wing yee weng
Ginkgo Capital Co., Limited is a Hong Kong-licensed asset manager (Type 4 Advising on Securities and Type 9 Asset Management) that provides clients with one-stop investment management services across domestic and international markets. The firm draws on the broader Ginkgo Capital Group’s proprietary ecological research platform (Gintong Network) to integrate fundamental analysis with artificial intelligence, supporting a research-driven, long-term investment approach.
Ginkgo Capital Co., Limited is a Hong Kong-licensed asset manager (Type 4 Advising on Securities and Type 9 Asset Management) that provides clients with one-stop investment management services across domestic and international markets. The firm draws on the broader Ginkgo Capital Group’s proprietary ecological research platform (Gintong Network) to integrate fundamental analysis with artificial intelligence, supporting a research-driven, long-term investment approach.
Wing Yee Weng is Executive Director and Fund Manager at Ginkgo Capital Co., Limited. He has extensive experience spanning equities, fixed income and quantitative strategies at both domestic and international financial institutions. Prior to joining Ginkgo, he served as Executive Director at Sinovation Ventures (Hong Kong), where he oversaw a team delivering investment management services to sovereign wealth funds, central-bank-level institutions and family offices. His investment philosophy combines forward-looking sector positioning, dynamic multi-asset allocation and a dual quantitative-fundamental research process focused on long-term value creation.
Wing Yee Weng is Executive Director and Fund Manager at Ginkgo Capital Co., Limited. He has extensive experience spanning equities, fixed income and quantitative strategies at both domestic and international financial institutions. Prior to joining Ginkgo, he served as Executive Director at Sinovation Ventures (Hong Kong), where he oversaw a team delivering investment management services to sovereign wealth funds, central-bank-level institutions and family offices. His investment philosophy combines forward-looking sector positioning, dynamic multi-asset allocation and a dual quantitative-fundamental research process focused on long-term value creation.
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