Cordlife

Cordlife: decent 2QFYJun13 results. Revenue at $8.8m, +23.9% yoy, mainly due to an increase in the no. of client deliveries, from ~1,900 in 2QFY12 to 2,300 in 2QFY13, thanks to greater awareness from more mktg and promotional activities undertaken. Net profit at $5.6m, +193% yoy, mainly boosted by a one-off $2.7m gain on disposal of its 10% indirect stake in associate China Stem Cells (South) Co. Recall, in Oct ’12, Cordlife exchanged its 10% stake in CSCS for a 10% stake in US-listed China Cord Blood Corp. The actual gain was lower than the previously estimated $3.9m gain due to fall in USD/SGD rate and mark up in book value of CSCS during the interim period. On outlook, mgt highlights that as the leading provider of cord blood banking services in Singapore, it is poised to benefit from the enhanced Marriage & Parenthood Package 2013, which incentives include, i) an increase of $2,000 per birth in the Baby Bonus cash gift up to the 4th child, ii) a Medisave account of $3,000 for every Sporean baby, iii) an extension of 6 yrs for the Child Devt Acct (CDA) until child turns 12, iv) an increase in the co-funding of the Assisted Reproduction Technology treatments from the current 50% to 75%. Mgt notes many of its existing clients already tap into their CDA to pay for Cordlife services, hence the extension of CDA and increase in Baby Bonus scheme will allow more parents to afford to store their children’s cord blood stem cells as an additional medical treatment alternative. The co declared a 1ct interim div, though it has yet to formalize a div policy. The stock trades at 12.6x annualized 1HFY13 core P/E, 1.94x P/B.