2013-08-01 CORD.si (JPMorgan) Company Visit Note _ Cordlife Group Limited

www.jpmorganmarkets.com

Asia Pacific Equity Research

01 August 2013

Company Visit Note

Cordlife Group Limited

Healthcare Services

Ying-Jian Chan, CFA AC

(65) 6882-2378

[email protected]

Bloomberg JPMA YCHAN

J.P. Morgan Securities Singapore Private

Limited

See page 14 for analyst certification and important disclosures, including non-US analyst disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the

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making their investment decision.

We visited Cordlife Group Limited at their new facility, APosh Bizhub in

Yishun, where the management shared with us the companys current

operations and growth plans.

Key highlights from the meeting:

Market leader position in Singapore: Cordlife is the market leader for

private cord blood banking in Singapore with a 62% market share in 2011.

Management estimates that this figure may have since increased to more

than 70%. Competitive advantages include the AABB accreditation and a

track record of 10 successful cord blood transplants.

Expansion of services and geography: Cordlife pursues a dual strategy of

growth, through expansion of services and ventures into new geographies. It

recently added umbilical cord tissue banking within Singapore, and has

indicated plans to further add to their product mix. At end of June 2013, the

company acquired businesses and assets in Philippines, Indonesia and India.

Reaping economies of scale with Asias largest private cord blood

storage facility: Cordlife launched its new 23,000 square feet facility in

April 2013. Management believes that the move will enable the company to

further meet the needs of its growing customer base in Singapore and allow

it to benefit from economies of scale, leading to greater operational

efficiency and margin expansion for their Singapore operations.

Stable recurring cash flow + dividend yield support: Cordlifes payment

plans include a combination of lump sum payments and recurring annual

installments. With 25,000 customers on the installment plan, and a growing

subscriber base, Cordlife expects a stable and recurring cash flow.

Management has also indicated a commitment to dividends.

Valuation: The stock now trades at a FY13E consensus P/E of 23.4x, and

has outperformed the STI Index by 97% since its IPO on 29 March 2012.

NOTE: THIS DOCUMENT IS INTENDED AS INFORMATION ONLY AND NOT

AS A RECOMMENDATION FOR ANY STOCK. IT CONTAINS FACTUAL

INFORMATION OBTAINED BY THE ANALYST DURING MEETINGS WITH

THE MANAGEMENT. J.P. MORGAN DOES NOT COVER THIS COMPANY AND

HAS NO RATING ON THE STOCK.

Cordlife Group (Bloomberg CLGL SP; Reuters: CORD.SI)

SGD in millions, year-end Jun FY10 FY11 FY12

Revenue 28.2 25.7 28.8 Shares O/S (mn) 232

Net profit (reported) 8.3 8.5 6.9 Market cap (S$ mn) 245

Net profit (recurring) 8.3 8.5 8.8 Market cap ($ mn) 193

EPS 0.04 0.04 0.03 Price (S$) 1.06

Recurring EPS (SGD) 0.04 0.04 0.04 Date of price 1-Aug-13

Recurring EPS growth 34% 2% 4% Free float (%) 65.9%

DPS (SGD) 0.0 0 0.00 0.04 3mth Avg daily volume S$ mn) NA

Sales growth 24.7% -8.8% 12.1% Average 3m Daily Turnover ($ mn) NA

ROE 25% 21% 9.7% FTSTI 3,243

P/E (recurring) (x) 29.7 28.9 27.8 Exchange rate 1.27

P/B (x) 7.4 6.0 3.4 Year-end Jun

Dividend yield 0.0% 0.0% 3.6%

Source: Company data.

CLGL SP, Not Covered

S$1.06, Aug 1, 2013

Share price

S$

Source: Bloomberg.

YTD 1m 3m 12m

Abs 88% 4% 48% 122%

Rel 86% 1% 55% 109%

Source: Bloomberg.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Mar-12 Aug-12 Jan-13 Jun-13

2Asia Pacific Equity Research

01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Key highlights from the meeting

We visited Cordlife Group Limited at their new facility at APosh Bizhub in Yishun,

where the management shared with us the companys current operations and growth

plans.

Market leader position in Singapore

Cordlife is the market leader for private cord blood banking in Singapore with a 62%

market share in 2011. Management estimates that this figure has since increased to

more than 70%. Management see certain competitive advantages which helps

Cordlife defend this position:

1. AABB accreditation: According to management, the process of accreditation

may take up to 2 years. The accreditation is important as it allows patients to

easily use the blood for transplant in many countries. This accreditation process

therefore creates a certain degree of barrier to entry for new entrants.

2. Cordlifes strong track record: According to management, Cordlife has

recorded 10 successful cord blood transplants. This track record provides

reassurance to customers who are deciding on a blood bank. Based on available

public disclosure, there has not been any successful transplant in the other

Singapore private cord blood banks yet.

3. Secured facility at APosh Bizhub: Cordlifes new facility is equipped with

backup systems such as an electricity generator, mobile storage, and liquid

nitrogen tanks. The facility itself is also designed to insulate against fire

breakouts. This increases assurance for subscribers.

4. Cordlife Care 360 Safeguard: This plan was designed to increase subscribers

peace of mind. Its coverage includes pregnancy and childbirth complications, as

well as a guarantee match for a cord blood unit (or US$25,000 to defray medical

costs if the cord blood unit loses viability at point of transplant).

Expansion of services and geography

Cordlife pursues a dual strategy of growth through expansion of services and

ventures into new geographies.

Expansion of services

It recently added umbilical cord tissue banking within Singapore through a

partnership with Thomson Medical Pte Ltd in May 2013. However, this service is

still under clinical trial, and is currently not yet licensed by the Ministry of Health

(MOH). Cordlife has also indicated plans to further add to their product mix; these

planned incremental services will leverage on Cordlifes existing expertise and

distribution channels, which allows them to roll out more easily and economically.

Expansion of geography

At end of June 2013, the company announced acquisitions of cord blood and cord

tissue banking businesses in Philippines, Indonesia and India from Australian listed

Life Corporation Limited (formerly Cordlife Limited), which the Cordlife Group had

demerged from. Cordlife had a right of first refusal on these assets and previously

indicated intentions to acquire these assets once they started to turn profitable. Total

consideration for the acquisitions was A$5.5million.


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

According to management, gross margin for these countries are at 55-65% (vs.

Singapore: c.70%). On a net profit basis, management has indicated that operations

in Philippines, Indonesia and India have just started to break even. In July 2013,

Cordlifes India subsidiary was also awarded the AABB accreditation

Reaping economies of scale with Asias largest private cord

blood storage facility

In April 2013, Cordlife launched its new 23,000 square feet facility, which spans 18

strata units on levels 5 and 6 of APosh Bizhub in Yishun. Management believes that

this move will enable the company to further meet the needs of its growing customer

base in Singapore and allow it to benefit from economies of scale. This facility is

also the first one in Asia to adopt an improved automated stem cell processing

technology known as Sepax 2, which allows for greater extraction effectiveness in

harvesting red blood cells from cord blood.

The motivation behind the outright purchase of this facility is to lock in property

costs and ensure that the business remains scalable as the companys customer base

expands in Singapore. Currently, while the facility is able to house up to 650,000

cord blood units, only approximately 40,000 cord blood units are being stored there.

Therefore, Cordlife leases out its units on level 5 to generate rental income in the

meantime.

As operations scale up, management is of the view that fixed costs of running the

facility will be spread out across a larger customer base, leading to greater

operational efficiency and margin expansion for their Singapore operations.

Stable recurring cash flow and dividends indication

Stable cash flow generation

Cordlifes payment plans include options for lump sum payments and/or recurring

annual installments. Of the current c.48,000 customer base, about 25,000 are on

installment plans. With a growing subscriber base, Cordlife expects a stable and

recurring cash flow. Since IPO, the company has been free cash flow positive.

Figure 1: Steady growth in client base

Source: Company reports.

0

10000

20000

30000

40000

50000

FY10 FY11 FY12

Existing client base Incremental clients

40,000

32,800

26,200


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Figure 2: Cordlife's business model generates stable, recurring cash flow


Dividend indication at least 25% payout ratio

Management highlighted that the company intends to recommend and distribute

dividends of at least 25% of FY11 and FY12 net profit for FY12 and FY13. The

stable cash flow generation should support this commitment. In FY12, Cordlife

declared S$8.8 million in dividends or S$0.038/share, which translated to 128%

payout ratio. This is inclusive of a S$0.018/share special dividend. We note that the

payout in FY12 was higher than free cash flow generation for that year, and was

probably supported by cash flow from FY11 where no dividends was paid out.

Table 1: Cordlife dividend payouts

S$ million

FY11 FY12

Dividend 0.0 8.8

Net income 8.5 6.9

Payout ratio 0% 128%

FCF 5.0 3.7

Dividend/FCF 0% 241%

Source: Bloomberg, Company reports, J.P. Morgan.

Industry growth prospects

The private cord blood banking industry which Cordlife currently operates in is

characterized by high penetration rates for developed markets (Hong Kong,

Singapore, China) and low but rising penetration rate for developing markets (India,

Philippines, Indonesia). It is driven largely by 4 demand factors: birth rates, rising

affluence, increased acceptance and awareness, and government policy support.

In Cordlife's key markets of Singapore and Hong Kong, while birth rates are

expected to stay relatively low, growth will be driven by increasing penetration rates.

On the other hand, in markets such as Philippines, Indonesia and India, growth is

expected to be driven both by the larger number of births (higher birth rates and

larger population base), and the increasing penetration rates which is forecasted to

approximately double by 2015.


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Figure 3: Penetration rates for developing markets

Source: Deloitte & Touche Financial Advisory Services Limited report, Company reports.

Figure 4: Penetration rates for developed markets

Source: Deloitte & Touche Financial Advisory Services Limited report, Company reports.

*China figures are for provinces with cord blood banking operations.

Table 2: Growth drivers for Cordlife's markets

Demand driver Singapore Hong Kong China India Philippines Indonesia

Public

awareness/acceptance

Most pregnant

women informed

at hospitals

Marketing efforts

to educate

doctors and

consumers

Awareness has

been raised

through celebrity

advertisements,

marketing to

doctors, and

encouraging

referrals

Rising awareness

of doctors and

parents led by

improved

education and

urbanisation

Rising awareness

led by intensive

marketing efforts,

as well as

increased access

to information

through the

internet

Both government

and private cord

blood banks are

promoting cord

blood banking to

the general public

Rising awareness

due to promotion

activities by cord

blood banks

Birth rates Pro-family

policies to boost

birth rates, e.g.

$2 billion

Marriage &

Parenthood

Package 2013

Projected

increase of birth

rate from 0.74%

(2011) to 0.76%

(2015)

Increased

duration of free

education to

encourage

having children

Second most

births annually in

the world

Annual new

births of 25.7

million expected

by 2016

India predicted to

become most

populous nation

by 2025

Population

expected to

increase by 8

million from 2011

- 2015

Large population

base, with annual

new births

expected at 4

million

Government policy /

structural support

Cord blood

banking can be

paid through

CDA

Hong Kong

citizens have

subsidised health

care, inclusive of

cord blood

transplant

operations

Stem cell industry

is covered under

China's 12th 5-

year plan

- Relatively well

developed

healthcare

system, with 86%

of citizens

enrolled in

PhilHealth. Some

packages cover

stem cell related

transplants

-

Affluence and

expenditure

Ratio of private

household

expenditure on

health care has

been increasing

(3.5% in 1998 to

5.3% in 2008)

- Rising middle

class leading to

bigger pool of

potential

customers

Rising middle

class

Rising middle

class: expected

per capita

disposable

income to

increase by

157% from 2007

- 2015

Per capita

disposable

income expected

to increase 98%

from 2007 - 2015

Source: Company reports, Deloitte & Touche Financial Advisory Services Limited report (10 April 2013), J.P. Morgan.

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

2007 2011 2015F

India Philippines Indonesia

0%

5%

10%

15%

20%

25%

30%

2007 2011 2015F

Singapore Hong Kong China


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Table 3: Cordlife peer valuation comparison

Last Price Market Cap P/E (x) 2-yr EPS CAGR P/B (x) ROE (%) Div yield (%)

Company Ticker (S$) (S$MM) FY13E FY14E FY12-14E FY13E FY13E FY13E

Cordlife Group CLGL SP 1.06 245 23.4 20.7 12% 3.1 15.5 2.0

Biosensors International BIG SP 1.03 1,772 11.9 10.5 7% 1.0 9.1 0.9

IHH Healthcare Berhad IHH SP 1.57 12,770 47.1 38.5 -5% 1.8 4.0 0.4

Raffles Medical Group RFMD SP 3.28 1,815 29.0 24.5 13% 4.2 15.4 1.4

SG Healthcare Stock average 27.9 23.5 7% 2.5 11.0 1.2

Source: Bloomberg consensus estimates. Prices as of 1 August 2013 market close.


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Company background

Cordlife Group Limited was listed on the Singapore Exchange on 29 March 2012,

raising S$26.3 million net of IPO expenses for the purpose of business expansion,

renovation works on its new headquarters and financing working capital. As of 31

July 2013, 49% of IPO proceeds have been utilized.

Table 4: Update on the use of IPO proceeds

Intended use of IPO proceeds Use of IPO proceeds as of 31 July 2013

Estimated amount

(S$ millions)

Estimated percentage of gross

proceeds raised from the IPO

Amount utilized

(S$ millions)

Percentage of gross proceeds

raised from the IPO

Development and expansion of business and

operations in Singapore and overseas

(includes June 2013 acquisition of Philippines,

India and Indonesia assets)

16.6 55.9% 9.8 33.2%

Renovation of proposed new headquarters and

facility at Yishun, A'Posh Bizhub3 10.1% 1 3.4%

Investments in infrastructure relating to

information technology2 6.7% 0 0.0%

Working capital and general corporate

purposes4.7 15.8% 0 0.0%

Expenses incurred in connection with the IPO 3.4 11.5% 3.7 12.5%

Total 29.7 100% 14.5 49.0%


The company has experienced rapid growth over the past year and now has a market

capitalization of c.S$250 million.

Growing footprint across Asia

Cordlife Group was incorporated in May 2001 and is currently the larger of the two

private cord blood banking service providers in Singapore and second largest in

Hong Kong, with over 70% in market share in Singapore based on management

estimates.

Cordlife Hong Kong, along with the 10% stake it held in Guangzhou Tianhe Nuoya,

a Cord Blood Banking operator in Guangzhou, was transferred into the Group in

2010. In November 2012, Cordlife Group divested the 10% stake in Guangzhou

Tianhe Nuoya to China Cord Blood Corporation (CCBC) as partial consideration for

a 10% stake in CCBC, which is listed on the NYSE. In June 2013, it acquired cord

blood and tissue banking assets in India, the Philippines and Indonesia from

Australian listed Life Corporation Limited (formerly Cordlife Limited), which the

Cordlife group had demerged from previously.

The group now has a customer base of approximately 48,000, of which a majority

(c.40,000) is from its more matured Singapore operations. With the exception of

China, Cordlife ranks top 3 in all other markets that it has a presence in. A

breakdown of the largest 3 players in Cordlifes market segments are as follows:


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Table 5: Market position in key markets

Singapore Hong Kong Mainland China India Philippines Indonesia

Top 1 Cordlife HealthBaby CCBC* Lifecell Cordlife Cordlife

Top 2 Stemcord Cordlife Zhongyuan CryoBanks StemCord BabyBanks

Top 3 - Cryolife Shandong Cordlife Medical City StemCord

Total no. of companies 2 6 8 11 5 5

Source: Deloitte & Touche Financial Advisory Services Limited report (10 April 2013).

*Cordlife has 10% share in China Cord Blood Corporation (CCBC).

Product mix

2 product types cord blood banking, and cord tissue banking

Cordlife Group currently offers 2 products, cord blood banking and umbilical cord

tissue banking services. The purpose of these services is to harvest stem cells from

cord blood and umbilical cord tissue and store them for future use.

Haematopoietic stem cells are harvested from cord blood and is effective in treating

blood disorders and certain cancers such as Leukaemia, Lymphoma and

Thalassaemia. Meanwhile, Epithelial and Mesenchymal stem cells are harvested

from umbilical cord tissue and can be used to grow tissues and organs such as bone,

cartilage, the liver, cornea or skin. With ongoing advances in medical research, there

is potential in unlocking new treatments using stem cell technology.

Figure 5: Uses of Epithelial and Mesenchymal stem cells


Rationale for private cord blood banking vs. public cord blood banking

There are several reasons why customers choose to store cord blood. Firstly, the

search for suitable stem cells from public cord blood banks for stem cell treatments is

usually time-consuming and costly. The Singapore Cord Blood Bank (SCBB)

charges a hefty S$26,000 search fee for local residents and US$25,000 for foreigners,

which is in addition to hospital transplant fees. Secondly, by storing an individuals

cord blood in a private cord blood bank, that individual is assured of a 100% match if

he were to use it on himself or a 40% chance match among immediate family

members should they require stem cell treatments.

To date, management has guided that Cordlife Group has released 10 units of cord

blood for its customers, all of which had been successfully engrafted in its patients.


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Pricing

Cordlife offers flexible pricing policies for its cord blood banking services, which are

competitive with competitors such as StemCord. The storage period for Singapore

customers is 21 years, after which the cord blood beneficiary will decide whether he

or she wants to continue storage. Payments can be made using the Child

Development Account (CDA) as Cordlife is an Approved Institution. The CDA is

part of the Baby Bonus scheme and is a savings account where parents deposits are

matched dollar for dollar by the government, up to a cap varying from $6,000 to

$18,000 (depending on the child order).

Table 6: Cord blood banking prices in Singapore and Hong Kong

Singapore Hong Kong

Cord Life StemCord Cord Life

Plan 1 Plan 2 Plan 3 Sole plan Plan 1 Plan 2 Plan 3 Plan 4

Upfront payment S$1,950 S$4,200 S$6,200 $1,580 HK$19,000 HK$23,500 HK$29,500 HK$36,000

Annual paymentS$250

(from yr 1-20)

S$250

(from yr 11-20)-

$275

(from yr 1-20)

HK$1,500

(from yr 1-18)

HK$1,500

(from yr 5-18)

HK$1,500

(from yr 10-18)-

Total S$6,950 S$6,700 S$6,200 S$7,080 HK$46,000 HK$44,500 HK$43,000 HK$36,000

Storage period

(yrs)21 21 21 21 18 18 18 18


Revenue structure

Revenue is derived mainly from the provision of cord blood banking services and is

recognized based on a percentage of completion (POC) method. Given that expenses

for processing cord blood samples are front loaded, 88% of revenue is recognized in

the initial year of cord blood storage, while the remaining 12% is recognized in

approximately equal portions at the completion of each year of storage.

In FY12, South Asia operations, which consists of Singapore, the Philippines and

Indonesia, accounted for 75% of revenue, while North Asia operations, consisting of

Hong Kong, China and Macau accounted for the remaining 25%. As highlighted

earlier, Singapore is a more profitable market with gross margin at c.70%. Business

conditions in Hong Kong are more challenging due to the nature of the healthcare

system. The seemingly higher proportion of North Asia profit against revenue is due

to the share of associates' earnings from the company's 10% stake in China Stem

Cells (South) which does not record attributable revenue.

10


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Figure 6: Cordlife's revenue distribution


Figure 7: Cordlife's profit distribution


Cost structure

For FY12, cost of sales comprised 35% of total operating costs. This includes

expenses in processing, testing and storage of cord blood, salaries for lab personnel,

depreciation of lab equipment and lab rental expenses.

Administrative expense contributes 37% towards total operating costs and relates to

non-lab staff salaries, cost of consultancy services relating to finance and

administration, depreciation of office and office rental expenses.

Selling and marketing expenses comprise of advertising activities, salaries for

marketing personnel and commissions (when referrals are made).

Figure 8: Cordlifes cost structure


The Company reported healthy gross margin averaging 71.6% over the past four

years. In FY12, gross margins fell marginally by 1 percentage point due to an

increase in the cost of maternal blood testing brought about by increased stringency

of the AABB standards.

North Asia

25%

South Asia

75%

North Asia

27%

South Asia

73%

COGS

35%

Selling and

marketing expenses

28%

Administrative

expense

37%

11


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Figure 9: Revenue and gross margins

S$ in millions


Key risks

We highlight below a few key risks to Cordlifes business:

Competition in Singapore

In July 2013, it was announced that AsiaMedic announced a joint venture with

Cryoviva International to establish a cord blood banking venture in Singapore. It will

be the 3rd

player in Singapore. The strong margin which Cordlife enjoys in Singapore

may come under pressure if pricing competition ensues.

Lack of medical developments in cord blood usage

Adoption of cord blood banking is dependent on the customers perceived expected

benefits of cord blood. Cord blood therapy is still at an early stage of development

and has a few limitations, such as the riskiness of treatment, long term viability of

cryogenically frozen cord blood, and the insufficiency of a typical single cord blood

harvest to treat an adult (one harvest typically has enough cells to treat a person up to

50kg). Therefore, the lack of medical developments may reduce adoption rate for

cord blood banking.

Slow penetration of cord blood banking in Philippines, India, and Indonesia

While the developing markets present potential through the large number of births,

penetration rates remain low. Given the recent acquisitions in the Philippines, India

and Indonesia region (which has only just achieved breakeven), the risk that market

penetration does not increase as expected is a concern.

Regulatory risks

Changes in the regulatory environment which Cordlife operates in can pose risks. For

example, a change in the blood testing requirements under the AABB had caused an

increase in costs and decrease in profit margins for Cordlife in FY12. Similarly, a

reduction in the Baby Bonus scheme could put pressures on profits. Additionally, the

recent moratorium which banned Mainland Chinese mothers from giving birth in

Hong Kong impacted revenues in Hong Kong.

68%

69%

70%

71%

72%

73%

74%

0

5

10

15

20

25

30

35

FY09 FY10 FY11 FY12

Revenue (L) Gross margin (R)

12


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Major shareholders

Table 7: Major shareholders

Shareholders %

Wells Spring Pte Ltd 10.84

Coop International Pte Ltd 10.52

China Stem Cells (East) Co Ltd 10.48

Mr. Yee Pinh Jeremy 0.71

Ms Jin Lu 0.28

Dr. Ho Choon Hou 0.27

Cordlife Group Ltd 0.09

Free Float 65.9

Source: Bloomberg, J.P. Morgan.

13


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

Cordlife Group Limited: Summary of financials

SGD in millions, year-end Jun

Profit and loss statement Cash flow statement

FY10 FY11 FY12 FY10 FY11 FY12

Revenues 28 26 29 Net profit 8 8 7

% change Y/Y 25% -9% 12% Depreciation & amortization 0 1 1

EBITDA 8 7 5 Other non-cash items 1 0 1

% change Y/Y 16% -14% -30% Change in working capital 0 1 -1

EBITDA margin (%) 28% 26% 16% Cash flow from operations 8 8 6

EBIT 7 6 4 Capex -2 -3 -2

% change Y/Y 15% -17% -35% Disposal/ (purchase) -11 -1 -18

EBIT margin (%) 26% 24% 14% Cash flow from investing -13 -4 -20

Net interest 0.0 0.0 0.0 Equity raised/(repaid) 0 0 26

Earnings before tax 7 6 4 Debt raised/(repaid) 0 0 2

% change Y/Y 15% -17% -34% Other 6 -7 0

Tax -2 -1 -1 Dividends 0 0 -5

as % of EBT 21% 24% 21% Cash flow from financing 6 -7 23

Minority Interests 0 0 0 Net changes in cash 1 -3 9

Net income 8 8 7 Beginning cash 7 8 4

Net income (recurring) 8 8 9 Ending cash 8 5 13

% change Y/Y 34% 2% 4%

Share outstanding 232 232 232 Free cash flow 7 5 4

EPS (S$) (recurring) 0.04 0.04 0.04 DPS (S$) 0.00 0.00 0.02

Balance Sheet Ratio Analysis

FY10 FY11 FY12 FY10 FY11 FY12

Cash 8 4 19 EBITDA margin (%) 28% 26% 16%

Accounts receivable 8 7 9 EBIT margin (%) 26% 24% 14%

Inventories 0 0 0

Others 5 2 1

Current assets 21 13 29

LT investments 21 23 26 Sales growth (%) 25% -9% 12%

Net fixed assets 2 4 6 EBITDA growth (%) 16% -14% -30%

Total Assets 59 55 90 Net profit growth (%) 34% 2% -18%

ST bank loans 1 0 0 Net profit (recurring) growth (%) 34% 2% 4%

Payables 1 0 1

Total current liabilities 21 8 8 Interest coverage (x) 171 156 313

Long term debt 0 1 2 Net debt/equity (%) Net cash Net cash Net cash

Other liabilities 5 6 8

Total liabilities 26 15 19 Sales/Assets (%) 48% 46% 32%

Shareholder's equity 33 41 71 Assets/Equity (%) 178% 137% 127%

Total liabilities and equity 59 55 90 ROCE (%) 28% 23% 12%

BVPS (S$) 0.14 0.17 0.31 ROE (%) 25% 21% 10%

Source: Bloomberg.

14


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

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average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve

months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)

coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of

the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if

applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy

reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a

recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return is

compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear

in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research

website, www.jpmorganmarkets.com.

Coverage Universe: Chan, Ying-Jian: Astra Agro Lestari (AALI.JK), BW Plantation (BWPT.JK), China Agri-Industries (0606.HK),

Felda Global Ventures (FGVH.KL), First Resources Limited (FRLD.SI), Genting Plantations (GENP.KL), Golden Agri-Resources Ltd

(GAGR.SI), IOI Corp. (IOIB.KL), Indofood Agri Resources Ltd (IFAR.SI), Kuala Lumpur Kepong (KLKK.KL), London Sumatra

Indonesia (LSIP.JK), Mewah International Inc (MEWI.SI), Noble Group Ltd (NOBG.SI), Olam International Limited (OLAM.SI), Salim

Ivomas Pratama (SIMP.JK), Sime Darby Berhad (SIME.KL), Wilmar International Limited (WLIL.SI)

J.P. Morgan Equity Research Ratings Distribution, as of June 28, 2013

Overweight

(buy)

Neutral

(hold)

Underweight

(sell)

J.P. Morgan Global Equity Research Coverage 44% 44% 12%

IB clients* 56% 50% 40%

JPMS Equity Research Coverage 42% 50% 8%

IB clients* 76% 66% 55%

*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold

rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table

above.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered

companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst

or your J.P. Morgan representative, or email [email protected].

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Other Disclosures

15


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

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16


01 August 2013

Ying-Jian Chan, CFA

(65) 6882-2378

[email protected]

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Copyright 2013 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or

redistributed without the written consent of J.P. Morgan. #$J&098$#*P

Key highlights from the meetingMarket leader position in SingaporeExpansion of services and geographyReaping economies of scale with Asias largest private cord blood storage facilityStable recurring cash flow and dividends indication

Industry growth prospectsCompany backgroundGrowing footprint across AsiaProduct mixPricingRevenue structureCost structure

Key risksMajor shareholdersCordlife Group Limited: Summary of financials

Documents

2013-08-01 CORD.si (JPMorgan) Company Visit Note _ Cordlife Group Limited