Initial coverage of 1300 Smiles Limited (ASX: ONT)

1300 Smiles achieves excellent returns on investment and the Managing Director, Dr Daryl Holmes, appears to have a lot of integrity. He proudly supports charity and owns over 60% of the company, which he founded. The company boasts impressive earnings growth since listing in 2005. The company is providing low cost dental care. The business of the company is to help dentists run more more profitable businesses by allowing them to focus on what they do best: treat patients.

1300 Smiles can take care of the business needs of the dentists it employs, and the dentists it serves. This is includes running practices, employing administrative staff and allowing those dentists to use its brand. In North Queensland, where most 1300 Smiles practices are, the brand is certainly useful. I hear they like Rugby League up there…

1300 Smiles Stadium

Over the next few years, I believe the company will make up any lost revenue resulting from the end of the Chronic Dental Disease Scheme, which closed in December 2012. The balance sheet is strong, and management is making a serious attempt to make dental services more affordable for customers. That should have positive ramifications for investors and society alike. At the current price of $6.50 the company trades on a trailing dividend yield of about 2.8%, fully franked.

I first wrote about 1300 Smiles in this article when the shares were trading at about $5.80. At $6.50 I believe 1300 Smiles is decent value, although there may be better opportunities to buy shares. I think the Improving Smiles program is attractive to customers as it makes dental care more affordable to those who join. This company is in the process of building a brand. I think the value of this brand is not reflected on the balance sheet, but is rapidly becoming evident.

The Author owns shares in 1300 Smiles. Nothing on this website is advice, ever. This post is for entertainment (and for my own reference!)

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