Cordlife

Cordlife: 3Q14 diappointed. Net profit rose 24.4% to $1.5m while revenue increased 64% to $11.8m on increased client deliveries, at 4,100 (3Q13: 1,760). This was contributed by client deliveries from Philippines and Indian subsidiaries and Indonesian assets acquired in Jun’13. Singapore and Hong Kong were soft, hence the disappointed results. Gross margin increased steadily from 69.8% to 74%. Bottom line was slowed down by increased selling and administrative expenses. Maybank KE remains positive on Cordlife for FY15, First, new products (Metascreen, umbilical cord tissue storage) will be rolled out across the region at a time when its growth markets are gaining critical mass. Second, MKE expects birth rate in Singapore to rise next year in conjunction with the Golden Jubilee celebrations. Lastly, Maybank KE expect maiden royalty income from CCBC as Cordlife and CCBC ramp up cord tissue storage services in China. A similar agreement has also been inked in Malaysia. Cordlife is trading at 16x annualized 9MFY14 P/E. Maybank KE maintains Buy on Cordlife with TP of $1.43