Cordlife Group - SAC Capital 2021-08-31: Cash Position Underpins Share Price

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CORDLIFE GROUP LIMITED (SGX:P8A)

Cordlife Group - Cash Position Underpins Share Price

Continued to be affected by restrictions and lower spending budgets

• Cordlife Group (SGX:P8A)'s revenue dropped 11.7% y-o-y to S$23.2m in 1HFY21 from S$26.2m, with lower new cord blood samples processed due to movement restrictions, and the tightening of household spending budgets in general. Outside its six key markets, samples from other markets (i.e. Myanmar, Vietnam and Bangladesh) need to be transported to one of their labs (in Singapore, Hong Kong, Indonesia, India, Malaysia and the Philippines), which is restricted with movement controls.
• The decline was slightly mitigated by the conversion of more clients to higher value price plans in the Philippines and Hongkong, and the increased revenue contribution from diagnostics services (in particular, pre-natal testing services), which grew 44.1% or S$0.5m.
• Gross margin edged up 0.5ppt from 62.7% to 63.2%.
• Cordlife Group's net profit dropped a smaller 5.2% y-o-y to S$2.5m in 1HFY21, from S$2.6m a year ago, lifted by
  1. government grants aggregating S$0.25m across their 3 markets, Singapore, Hong Kong and Malaysia;
  2. share of profit of associate Thai Stemlife Co. Ltd. of S$0.29m from a reversal of impairment due to its profitability;
  3. a 6.7% or S$1.2m decrease in SG&A expenses translating to cost savings.

Hong Kong Screening Centre (HKSC) became indirect wholly-owned subsidiary of Cordlife Group

• Cordlife Group, through its wholly-owned subsidiary Cordlife Stem Cell Technology, acquired the remaining 33% of shares in Hong Kong Screening Centre (“HKSC”) at HK$0.3m (approx. S$57.1K), making HKSC now an indirectly wholly-owned subsidiary. The acquisition is not expected to have any material impact on the net tangible assets and net earnings per share for FY21.

Flushed with cash

• Cordlife Group is a cash cow, with current Cordlife Group share price.

Cordlife's key markets seeing uneven recovery from COVID-19

• Out of the six countries Cordlife Group operates daily cases, most continue to suffer from the wrath of the pandemic.
• See
  • Cordlife Group's Share Price,
  • Cordlife Group's Target Price,
  • Cordlife Group's Analyst Reports,
  • Cordlife Group's Dividend History,
  • Cordlife Group's Announcements,
  • Cordlife Group's Latest News.
• COVID-19 has prompted higher household variants in the future, which will prolong any economic lags or declines.

Lim Li Jun Tracy SAC Capital Research | https://www.saccapital.com.sg/ 2021-08-31

SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000