AsiaMedic / Cordlife

AsiaMedic / Cordlife: AsiaMedic enters into JV with Cryoviva to become the third private sector market player to offer cord blood stem cells banking in Singapore. Cyroviva will hold 75% of the JV, while AsiaMedic will hold the remaining 25%, with an option to raise its stake to 49% within two yrs at fair market price. The group is confident that this JV can establish its footing by replicating its partner’s successful ventures in India and Thailand, and leveraging on an FDA approved stem cell technology originating from US-based Lifeforce Cryobanks – ranked as the Global Top 10 Cord Blood Bank based on profitability, innovative business models and marketing strategies at the World Cord Blood Congress 2013. Cyroviva SG will finalize a location for its laboratory by end 2013, while its sales office will be housed in AsiaMedic’s flagship centre in Shaw House. Cryoviva SG is scheduled to start operating in 2014. The project initial capital invmt for operations is $1.8m. AsiaMedic intends to fund its share via internal resources and bank borrowings. AsiaMedic’s latest healthcare portfolio expansion plans may be taken positively by the market, given the growing awareness and participation in cord blood banking. However, there may be possible negative impact on sentiment on the incumbent cord blood banking operator, Cordlife, as market may be concerned about the potential competition and possible market share erosion. With the stock having risen ~16% over the past two days, following an initiation Buy call by Maybank KE, investors may take the opportunity to remove some profits from the table.