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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