Tuesday, September 10, 2013

Maybank KE Report 11 Sep 13

Cordlife Group: Racing Ahead; Maintain Buy, $1.305 - TP $1.44
CLGL SP | Mkt Cap USD235m | ADTV USD1.4m

Cordlife’s acquisition of 19.9% of Stemlife for RM30m, the largest listed cord blood bank in Malaysia, brings a lot of long-term advantages. Margin enhancement, two new underpenetrated markets, tons of cash and undervalued property assets and a low cost platform to fight off price-oriented competitors in Singapore.
However, convertible bonds issued by associate China Cord Blood could introduce some short term volatility in earnings under the relevant IAS and IFRS accounting and disclosure standards, although core profits will still be intact. We urge investors to look beyond this issue.
We continue to like Cordlife in the long term as it continue to pursue strategically-sound expansion plans. Our TP of SGD1.44 (down slightly on dilution from acquisition) implies 25x FY14F, which is one point above its global peers and 16% discount to its local peers.
Click here for full report johncheong@maybank-ke.com.sg

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