Cordlife Group to see higher growth in 2015 from cord-tissue services in China and Malaysia

Plus CCBC bonds and Magnum Opus funding.

Cordlife registered a 9% fall in profits YoY to SGD1.4m on A&P spending of SGD1.3m in India where Cordlife is a strong mass-market contender.

According to a report by Maybank Kim Eng, 1Q profit met only 11% of our FY6/15E forecast as two income streams already in our full year forecast will only come through in future quarters: 1) royalty income from cord-tissue services in China and Malaysia; and 2) net interest income from CCBC bonds and its Magnum Opus funding agreement.

1QFY15 revenue was up a healthy 17% YoY to SGD13.3m. The pace should strengthen in future quarters as Indian clients have signed up strongly following intense marketing. India, the Philippines and Indonesia should gain critical mass this year with the rollout of new products (eg Metascreen, umbilical tissue storage).

As Cordlife only launched cord tissue storage services in Beijing in September, royalty income was negligible in 1Q. They will be rolled out in Guangzhou and Zhejiang soon, and these are potentially much bigger markets. Royalty income, which we estimate at SGD2.2m pa, should be more substantial in the coming quarters.