• Cordlife Group (SGX:P8A)'s 2H21 revenue (+7.4% h-o-h, +3.3% y-o-y) and EBITDA (+52.3% h-o-h, +51.6% y-o-y) point to a recovery. EBITDA margin, at 15.6%, was above FY19’s 14.3%, as it signed up more full-payment plans, improved processes and incurred lower marketing costs.
• Cordlife Group's FY21 net profit was 31.2% higher y-o-y, if the non-recurring S$2.1m government grant received in FY20 were excluded. Full year’s revenue was -3.9% y-o-y, led by -5.7% in core cord blood banking services. Diagnostics services grew 33% to S$3.6m, though this was only 6.3% of total revenue.
• The growth in sample collections in 2H21 (+19.3% h-o-h, +5.0% y-o-y) suggested an uptick in the core cord blood banking operations, as these would translate into revenue in future periods. Contract liabilities, representing advanced receipts, rose 7.8% y-o-y to S$76.1m as at end 2021, indicating higher revenue recognition going forward. These supported Cordlife Group's OCF/share of S$0.037 and a strong net cash of S$74.6m, or S$0.292/share.

Lifting of COVID Curbs Would Help Lift Cordlife Group's Earnings

• Lifting of COVID curbs would help lift Cordlife Group's earnings in the blood banking could gain wider acceptance if more studies demonstrate the benefits of using stem cells in regenerative therapy.

Low Live-births in Core Markets Singapore (45% of Revenue) and HK (13.6%) Remain a Concern

• Singapore’s total number of babies grew 0.16% in other developed markets such as the US, there are private operators that also offers public services, such as listed Cryo-Cell International (FY21 P/E 30x).

Trades at 30% Discount to Book

• Cordlife Group's Share Price is at a 30% discount to book value of S$0.534/share, 3x FY21 EV/EBITDA and 16.3x FY21 PER.

Source: SAC Capital Research - 8 Apr 2022