Cordlife: Last Friday, 10%-owned US-listed China Cord Blood Corp (CCBC) spiked 11% to its 3-year high, after one of its major shareholders, Jayhawk Capital, sent an open letter urging it to pay a special dividend out of its ample cash reserves.
Jayhawk has also asked CCBC to initiate regular share repurchases and dividends from its rich cash flow.
Maybank-KE estimates that if CCBC does pay out the special dividend, this will add $5.5m, or 61%, to Cordlife’s FY15E earnings of $9m and provide a recurring lift to future earnings.
Jayhawk, a private equity firm and an employee owned investment manager based in US, valued CCBC at US$16.80/share, almost 3x higher than the US$6.00 valuation that the house appended to it, and argued that the company is deeply undervalued against global peers.
Maybank-KE has rolled forward its base year to FY16 and subsequently raised its TP for Cordlife to $1.35 (from $1.30).
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