Cordlife Group - SAC Capital 2022-09-02: Lower Births & Cut Back In Discretionary Spending

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CORDLIFE GROUP LIMITED (SGX:P8A)

Cordlife Group - Lower Births & Cut Back In Discretionary Spending

• Cord blood banking operations has been slow to pick up. Cordlife Group (SGX:P8A)'s 1H22 revenue was 4.0% lower y-o-y to S$26.2m, and net profit -24.1% to S$1.9m.
  • Total number of samples collected fell 4.5% to 8,400, with growth in India offset by decline in Singapore and Hong Kong. However, revenue per sample is lower in India.
  • Malaysia’s revenue continued to fall, by 10.9% y-o-y, as the weak economy dampened consumer spending.
  • Philippines’ revenue grew 6.9%, but this could be fuelled by election, and one-off, in our view.
• Though elective healthcare spending has resumed post COVID reopening, Cordlife's core banking operation faces macro-economic headwinds and post-pandemic shifts in consumer behavior; chiefly:
  • Decline in new births. In Singapore, the number of newborns fell 4.7% to 17,546 in Singapore in 1H22. The number of babies fell 5.1% to 35,100 from Jul 21-Jun 22. Crude birth rates in 2021 (number of babies born to 1,000 residents) was 8.5% in Singapore and 5.0% in Hong Kong.
  • Singapore’s population shrunk 4.1% in 2021, a second consecutive year of decline, while Hong Kong’s was 1.6% lower (Jan-Jun 22). Besides death, the decline was also due to expatriates that departed during COVID and emigrations to other countries. A lower population would lead to lower new births.
  • Inflationary pressure and recessionary concerns could cause a cut back in discretionary spending such as for cord blood banking services. And in Singapore, Cordlife competes with the public cord blood bank, Singapore Cord Blood Bank, which also offers private banking services.

Cordlife Group's Financials

• Refer to report attached below for Cordlife's financial figures. Total contract liabilities of S$77m, which are contracts entered into for work to be performed in the future, would underpin Cordlife's forward revenue and earnings. However, we do not think organic revenue can return to pre-COVID level in the next two years.
• 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.
• Cordlife's balance sheet has net cash of S$74m, or S$0.29 per share. We believe the bulk of these are advanced receipts.
• Cordlife's share price is trading at 0.7x P/B and 0.9x P/NTA (net tangible assets).

Peggy Mak SAC Capital Research | https://www.saccapital.com.sg/ 2022-09-02

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