Monday, October 7, 2013

Cordlife: Attractive to private investors

Cordlife Group Ltd:
FAIR VALUE: S$1.35 (adjusted)
Attractive to private investors

Proposed private placement raising up to $33.5 gross proceeds. Cordlife Group (CLGL) announced the proposed private placement of up to 26.8m new shares at an indicative price of $1.25 for each placement share. In total, the Group expects to raise net proceeds of $32.1m (or gross proceeds of $33.5m). The share placement will be carried out via a private placement of up to 17.8m shares and a direct subscription from five investors of up to 9.0m shares. The issue price of $1.25 represents a 3% discount from the last close price of $1.285 as at 2 October 2013.

73% of fresh capital deployed to funding its newly acquired operations. In the announcement, CLGL stated the use of $23.5m (73% of net proceeds) to fund and support the operations developed after the company’s IPO, which in our opinion would include the newly acquired subsidiaries in India, Philippines and Indonesia and its strategic alliance with StemLife Berhad. With the capital injection, the Group would be able to further align its business interests and pursue its growth potential. The remaining $8.6m will be utilized for general working capital purposes.

Cordlife CEO steps down from the Board of China Cord Blood Corp (CCBC). Mr Jeremy Yee, Cordlife Group CEO was previously the independent non-executive director on the board of CCBC. Wef from 27 September 2013, Mr Yee has stepped down from board duties to focus on CLGL’s expansion in India, Philippines and Indonesia. CLGL’s investment in CCBC will be accounted for as a financial asset going forward.

FY14F EPS lowered by 21% to 3.3 cents due to dilution impact and accounting reclassification of CCB. Assuming a full subscription of the private placement, we lower FY14F/15F PAT by approximately $2m and $4m respectively and henceforth EPS adjusts to 3.3 cents and 2.8 cents accordingly.

Maintain HOLD with a TP of $1.35. We adjust our DCF-derived TP to $1.35, as a result of the dilution impact from the capital injection. We view the private placement as a positive development as the company is in a better capacity to monetize the growth potential from the earnings accretive acquisitions.

Source/Extract/Excerpts/来源/转贴/摘录: AmFraser-Research,
Publish date: 03/10/13

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