Cordlife Group unfazed by recent headwinds in Hong Kong

Thanks to strong boost from Singapore market.

According to Maybank Kim Eng, Cordlife announced its 4QFY6/13 results yesterday. Recurring net profit is 6% above Maybank's expectation on the back of strong revenue and higher profit from its newly acquired China’s associate. 

Resilient earnings maintained despite headwind in Hong Kong. Earlier, a complete ban of mainland women from giving birth in Hong Kong has raised concern on Cordlife’s earnings, this result show that Singapore market itself is strong enough to outpace a minute slowdown in Hong Kong.

Here's more:

With only one product, Singapore market registered a revenue growth of 24%, making up for a slowdown of 17% in Hong Kong market, bringing the total revenue growth to a record strong 15%.

Umbilical cord tissue storage in full swing. Moving ahead, we expect Singapore market to be more attractive as contributions from umbilical cord tissue storage will be in full swing subsequent to its nationwide launch recently.

We view this service as entirely compatible with its current bestselling service, where Cordlife can effortlessly push the product through its existing marketing channel which consists of its experienced sales team and established relationship with doctors.

Moreover, as the sole provider of this service in Singapore provide an edge to Cordlife on many fronts.

Aggressive headcount increased serves as a strong growth signal. According to its results note, Cordlife has incurred SGD1.2 million to increase headcount to maintain its service quality.

In our view, it serves as a signal that company is confident on sustaining a strong growth rate moving forward as it seeks to market its umbilical cord tissue and launch more new product in its pipeline.

Transforming to a multi-product healthcare player. Cordlife’s statement of its transition plan serves as a strong hint that it is ready to launch new product in its pipeline.