MAINBOARD-listed Q&M Dental Group is joining hands with two Chinese companies to establish a surgical mask-manufacturing company, the company said in an exchange filing on Wednesday evening.

It said it entered into a non-binding memorandum of understanding with Hubei Asihubao Living Supplies, a company that manufactures and sells Class 1 medical devices, and Guangzhou Pharmasen, a medical equipment wholesaler.

Under the proposed investment, all three companies will contribute funds to set up the joint venture company, with Aishubao contributing 70 per cent; Pharmasen, 10 per cent; and Q&M, 20 per cent.

The actual terms of the proposed investment and the respective investment amounts will be negotiated and agreed upon at the "definitive agreement stage", Q&M said.

This agreement comes in the wake of a worldwide shortage of surgical masks, which saw subsequent price surges, due to the Covid-19 outbreak.

Q&M said even though it has a "healthy stockpile" of surgical masks for its staff and employees, it decided to enter into this joint venture as a means to reduce its reliance on external manufacturers and safeguard the company against future supply shocks.

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Q&M shares closed at S$0.46 on Wednesday, up two Singapore cents or 4.55 per cent from the previous day.