Cordlife Group Ltd - Phillip Securities Pte Ltd

Cordlife Group Ltd 

Strong FCF generation at a reasonable price 

Bloomberg │ Reuters │ POEMS 

CLGL SP │ CORD.SI │ CLGL.SG 

Industry: Medical & Healthcare 

Report type: Initiation 

Company Overview 

Cordlife Group (Cordlife) is a provider of cord blood and 

tissue banking services. Cordlife operates primarily in 

Singapore and Hong Kong, but offers indirect exposure to 

China with a 10% stake in China Cord Blood Corporation. 

Core earnings to increase at CAGR of 8.5%. 

Strong FCF generation to sustain high dividend payout 

to shareholders. 

Potential venture into complementary products. 

Acquisition of assets from CBB would drive 

geographical diversification into emerging markets. 

Undemanding valuations for a defensive stock. 

Initiate with Buy, TP of S$0.84. 

We initiate coverage on Cordlife with a Buy 

recommendation and TP of S$0.84. The key reasons for our 

positive view are as follow: 

#1: Expect core earnings to increase at CAGR of 8.5% 

over the next 3yrs. 

With increasing awareness of cord blood banking, we 

expect market penetration of Singapore and Hong Kong to 

improve materially over the next 3yrs. Cordlife is well 

positioned to benefit from this positive trend as one of the 

few private cord blood banking service providers in these 

markets. Furthermore, we believe that the Singapore 

government would keep policies accommodative to 

stimulate the current low level of birth rates (TFR target: 1.4- 

1.5 vs 2012E: 1.28-1.30) in the country. This is evident by a 

recently announced S$2bn package to promote marriage 

and parenthood. 

Fig 1: Profit Trend (S$’mn) 

12 

10 

8 

6 

4 

2 

0 

Net Income, adj. 

Source: PSR est. 

CAGR 12-15E: 8.5% 

FY09 FY10 FY11 FY12 FY13E FY14E FY15E 

#2: Strong FCF generation to sustain high dividend 

payout to shareholders. 

We expect Free Cashflow (FCF) to trend north from FY14E 

onwards as maintenance CAPEX requirements are likely to 

stay low. FCF generated by the company is highly visible 

and is backed by annual cashflow streams of c.S$6.25mn 

from the 25k existing customers on annual payment plans. 

We expect the strong cash generated to sustain a payout 

ratio of c.60% in the next 3yrs. 

MCI (P) 194/11/2012 

Ref. No.: SG2013_0066 1 of 21 


Raw Beta (Past 2yrs w eekly data) n.a. 

Phillip Securities Research Pte Ltd 

Rating 1 Buy 

- Previous Rating n.a. Not Rated 

Target Price (SGD) 0.84 

- Previous Target Price (SGD) n.a. 

Closing Price (SGD) 0.645 

Expected Capital Gains (%) 30.2% 

Expected Dividend Yield (%) 3.9% 

Expected Total Return (%) 34.1% 

Market Cap. (USD mn / SGD mn) 121 / 150 

Enterprise Value (USD mn / SGD mn) 115 / 143 

3M Average Daily T/O (mn) 2.0 

52 w eek range (SGD) 0.41 - 0.7 

Closing Price in 52 w eek range 

0.80 

0.70 

0.60 

0.50 

0.40 

Apr-12 

8 April 2013 

Major Shareholders (%) 

1. China Stem Cells East Co Ltd 

10.5 

2. Lau Wai Chi Stellan 

Jul-12 

Oct-12 

0% 50% 100% 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

3. Coop International Pte Ltd 8.8 

Jan-13 

Volume, mn CLGL SP EQUITY STI rebased 

Key Financial Summary 

FYE 12/12 12/13F 12/14F 12/15F 

Revenue (SGD mn) 28.8 33.8 36.8 41.2 

Net Profit, adj. (SGD mn) 8.8 9.4 10.0 11.3 

EPS, adj. (SGD) 0.038 0.040 0.043 0.048 

P/E (X),adj. 17.0 16.0 15.0 13.3 

BVPS (SGD) 0.306 0.330 0.348 0.369 

P/B (X) 2.1 2.0 1.9 1.7 

DPS (SGD) 0.038 0.025 0.027 0.030 

Div. Yield (%) 5.9% 3.9% 4.2% 4.7% 

Source: Bloomberg, PSR est. 

*All multiples & yields based on current market price 

Valuation Method 

SOTP 

Analyst 

Derrick Heng 

derrickhengch@phillip.com.sg 

+65 6531 1221 

9.4


Singapore Equities Research 

8 April 2013 

Fig 2: Free Cashflow (S$’mn) 

8 

7 

6 

5 

4 

3 

2 

1 

0 

Free Cashflow 



#3: Potential venture into complementary products. 

Cordlife announced a strategic alliance with Cordlabs Asia 

to offer umbilical cord tissue banking services beyond its 

current market in Hong Kong. The alliance would allow 

Cordlife to provide the services in India, Indonesia, Malaysia, 

Philippines, Singapore and Hong Kong on an exclusive 

basis and in Thailand on a non-exclusive basis. We believe 

that this alliance would leverage on the company’s existing 

network and open up new growth markets for the group. 

#4: Acquisition of assets from CBB would drive 

geographical diversification into emerging markets. 

Cordlife has a Right of First Refusal (ROFR) for the 

acquisition of various operating assets in Philippines, 

Indonesia & India from Cordlife Ltd (CBB), the Australia 

listed entity that owned Cordlife Group prior to its demerger 

in June 2011, should the company decide to divest. 

Acquisition of these entities would provide Cordlife with 

geographical diversification into emerging markets that have 

higher birth rates and lower market penetration. The recent 

results of CBB suggest that its operations in the emerging 

markets could start turning profitable soon. As long as they 

do not overpay for these emerging assets, we view any 

potential acquisition as a positive catalyst for the stock. 

#5: Undemanding valuations for a defensive stock. 

Lastly, we find the valuations for the stock of Cordlife as 

undemanding on various matrices. Despite the defensive 

nature of its business, the stock of Cordlife trades at a 

forward P/E of only 15X. Adjusting for the cash, liquid 

investments and market value of Cordlife’s stake in China 

Cord Blood Banking Corp, the core business of the company 

would offer a market leading FCF yield of c.7% in FY14E 

and beyond. With the stock trading at our bear case 

valuation level, we see limited downside at this entry point. 

2 of 21 

Fig 3: Forward P/E of 15X 

20 

18 

16 

14 

12 

10 

Feb-12 

Mar-12 

Apr-12 

Forward P/E (X) 

May-12 

Jun-12 

Fig 4: High levels of FCF yield (%) 

10% 

8% 

6% 

4% 

2% 

0% 

Adjusted FCF yield (%) 


3.5% 

Jul-12 

Aug-12 

4.0% 

Sep-12 

Oct-12 

Nov-12 

Dec-12 

7.0% 

Source: Bloomberg, PSR 

Jan-13 

Feb-13 

Mar-13 

15.2 

Apr-13 

7.6% 

FY12 FY13E FY14E FY15E 

May-13 

Jun-13



8 April 2013 

Financial Summary 

Deeper market penetration in Singapore to drive 

revenue growth 

After building in increased client deliveries from deeper 

market penetration in Singapore, we expect revenue to 

increase by 13% p.a. till FY15E. Our revenue growth 

forecasts are conservative and already lower than the 18% 

y-y revenue growth in 1HFY13 that is driven by 550 more 

deliveries. 

Hong Kong market to contract, mitigated by price hikes 

We expect Cordlife’s business in Hong Kong to contract in 

CY13 due to the negative impact of policy restrictions on 

deliveries by mainland women in Hong Kong. While the 

policy measures are negative for Cordlife, we opine that the 

impact would be softened by a price hike of c.7-9% (PSR 

est.) over the past yr. As its business in Singapore had been 

the main earnings driver, we believe that the impact of a 

contraction in the Hong Kong would not be material to the 

group. 

Fig 5: Forecasting CAGR growth of 13% to FY13E 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

Revenue CAGR 12-15E: 13% 



Cost components 

We estimate that 35% of the company’s cost structure is in 

items that are variable in nature (mainly expenses 

associated with the conduct of the procedure). As the 

company had effectively locked in longer term overheads 

after moving into the new facility in Yishun, we expect 

administrative expenses to stabilize at S$8-10mn p.a. in the 

next 3yrs. While marketing expenses could continue 

trending higher, we believe that it should stabilize at c.23% 

of sales. 

Fig 6: Cost Structure 

Cost of Sales 

35% 


Selling and 

marketing 

expenses 

28% 

Administrative 

expenses 

37% 

3 of 21 

EBITDA margins to expand on better product mix and 

economies of scale 

EBITDA margins have contracted over the past 4 yrs as the 

company stepped up its marketing efforts and incurred 

higher variable costs to comply with a change in the AABB 

(an association involved in the field of transfusion medicine 

and cellular therapies, formerly known as American 

Association of Blood Banks) standards. However, we expect 

profitability to improve over the next 3yrs due to economies 

of scale and bigger contributions from the higher margin 

business in Singapore. 

Fig 7: Margins should expand on economies of scale 

14 

12 

10 

8 

6 

4 

2 

0 


EBITDA 

EBITDA margin (%) 


38% 

36% 

34% 

32% 

30% 

28% 

26% 

Profit contribution by geography 

After stripping out contributions from its mainland associates, 

Cordlife’s business in North Asia (mainly Hong Kong) had 

not been a meaningful profit contributor. South Asia (mainly 

from Singapore) remains a key profit driver with PBT 

contributions of c.S$7-9mn a year. With positive underlying 

business trends, we believe that its operations in South Asia 

will continue to be a driver of profits for the group. 

Fig 8: Revenue by geography (S$’mn) 

30 

25 

20 

15 

10 

5 

0 

South Asia 

North Asia 

16.9 

5.7 

20.3 

Source: Cordlife 

19.2 

21.7 

7.9 6.5 7.1 

FY09 FY10 FY11 FY12 

Fig 9: Profit by geography (S$’mn) 

12 

10 

8 

6 

4 

2 

0 

(2) 

Source: Cordlife, PSR est. 

6.9 

9.0 

0.8 0.2 

8.3 7.5 

(0.1) 

South Asia 

North Asia 

(0.0) 


*Profit contributions adjusted to remove contributions from 

associates and added IPO expenses to South Asia for FY12.



8 April 2013 

Stable FCF to sustain dividend payout to shareholders 

We expect CAPEX to decline significantly in FY14E onwards 

as we estimate that its existing facilities in Singapore & 

Hong Kong would only have a blended utilization of 10% by 

the end of FY15E (based on facility space). Consequently, 

we have forecasted increasing Free Cashflows (FCF) of 

more than S$7mn/yr from FY14E onwards. FCF generated 

by the company is highly visible and is backed by annual 

cashflow streams of c.S$6.25mn from the 25k existing 

customers on annual payment plans. Furthermore, we 

expect recurring income stream to grow over time as the 

number of units stored at the company increases. Hence, 

we explicitly modeled in payout ratios of c.60% till FY15E, 

which would use up c.S$6mn/yr of cash inflow (c.80% of 

FCF). Our payout ratio assumption of 60% is higher than 

management guidance of at least 25% in its IPO prospectus 

as we believe that the strong cash generation and low 

gearing of its balance sheet should allow them to sustain a 

higher level of payout to shareholders. 

Fig 10: FCF to sustain at >S$8mn/yr after FY15E 

10 

8 

6 

4 

2 

0 

(2) 

(4) 

(6) 



Fig 11: DPS (S$) 

0.050 

0.040 

0.030 

0.020 

0.010 

0.000 

CFO CAPEX, net FCF 

100% 

DPS Payout Ratio (%) 


62% 63% 62% 

0.038 0.025 0.027 0.030 

FY12 FY13E FY14E FY15E 

120% 

100% 

80% 

60% 

40% 

20% 

0% 

4 of 21



8 April 2013 

Valuation 

With strong cash generation from its matured business units, 

we believe that it is most appropriate to value the core 

business using a DCF approach. Cordlife also holds a 

significant 10% stake in China Cord Blood Corp that forms 

c.13% of our valuation of the stock. Due to its unique 

business model, we opine that Cordlife is not comparable to 

other healthcare stocks listed on the SGX on a relative 

valuation basis. As the cord blood banking business is highly 

dependent on local market conditions, we believe that 

comparing companies that operate in different countries is 

far from meaningful. There are no comparable global peers 

that operate in similar geography to Cordlife. 

Fig 12: 34% upside to our target price of S$0.84 

Sum of the parts Value Percent Per shr Remarks 

(Base case valuation) S$'mn S$ 

Core Value of Company, DCF 145.3 74% 0.62 DCF (WACC: 9.0%, terminal g: 1%) 

Stake in China Cord Blood Corp. 26.2 13% 0.11 Market Value (US$2.87/shr) 

Enterprise Value 171.6 88% 0.74 Basis: FY14E 

Add: Investments 19.9 10% 0.09 

Add: Cash 10.1 5% 0.04 

Less: Debt (5.5) -3% (0.02) 

Equity Value 196.0 100% 0.84 

Outstanding no. of shares ('mn) 232.7 

Target Price (S$') 0.84 

Current Market Price (S$) 0.645 

F12M DPS (S$) 0.025 

Price upside (%) 30.2% 

Dividend yield (%) 3.9% 

Total return (%) 


34.1% 

Undemanding at P/E of 15X 

Given the defensive nature and positive growth outlook, we 

believe that the current P/E multiple of 15X undervalues the 

stock of Cordlife. Furthermore, the company has a very 

visible stream of future cashflows from its long term 

contracts with customers. At our target price of S$0.84, the 

stock would trade at a FY14/15E P/E of 19.6/17.4X 

respectively. 

Fig 13: Forward P/E of 15X 

20 

18 

16 

14 

12 

10 

Feb-12 

Mar-12 

Apr-12 

Forward P/E (X) 

May-12 

Jun-12 

Jul-12 

Aug-12 

Sep-12 

Oct-12 

Nov-12 

Dec-12 


Jan-13 

Feb-13 

Mar-13 

15.2 

Apr-13 

May-13 

Jun-13 

5 of 21



8 April 2013 

SWOT Analysis 

Strength 

Brand awareness and goodwill in matured market 

With significant operating history in Singapore and Hong 

Kong, we believe that Cordlife has a well established brand 

name in these core markets. Marketing efforts over the 

years have led to strong brand recognition and significant 

amount of goodwill in the countries. 

Strong cash generative business 

After incurring significant CAPEX from moving into its new 

facility in Yishun, we expect minimal CAPEX needs for its 

business in Singapore over the next few years. Hence, we 

expect high levels of free cashflows to be generated by its 

business in Singapore, which should allow Cordlife to 

provide a stable stream of dividends to shareholders and 

supply the cash for investments into other areas of growth. 

Opportunities 

Leveraging on rich database of client information 

With its existing pool of cord blood under storage, Cordlife 

holds a rich database of client information. Hence, we 

believe that the company would be able to engage them as 

repeat customers for their subsequent babies or offer 

complementary products to them in the future. 

Expansion into emerging markets 

If Cordlife successfully acquires the operating assets from 

CBB, the company would be able to gain an exposure to the 

fast growing emerging markets. These emerging markets 

have lower levels of penetration and higher birth rates. 

Umbilical cord tissue banking 

Currently, Cordlife only offers umbilical cord tissue banking 

services in Hong Kong. However, the company recently 

announced a partnership with Cordlab Asia to offer umbilical 

cord banking services in Singapore, Hong Kong, Malaysia, 

Indonesia, Philippines and India on an exclusive basis and 

in Thailand on a non-exclusive basis. If successfully 

executed, this new business would open up a new source of 

income for the group. 

Revenue streams beyond existing contractual period 

Existing contracts for cord blood banking are for 21yrs and 

18yrs in Singapore and Hong Kong respectively. Hence, we 

believe that upon contract expiry, there is the opportunity for 

contract renewal with the children of its existing clients. 

6 of 21 

Weakness 

Key markets have been experiencing low fertility rates 

As discussed below, the core markets of Singapore and 

Hong Kong had been experiencing fairly low fertility rates. 

Hence, growth in market size would likely be limited if this 

trend continues. 

Dependent on discretionary spending 

While there are merits associated with storing one’s cord 

blood, cord blood banking remains a discretionary form of 

spending. Hence, we expect the market size to shrink in 

times of weak economic conditions, when discretionary 

spending is scaled back. 

Threats 

Threat of substitute from public cord blood banks 

Cord blood units from public banks could be used for 

treatment as well. We believe that a significant increase in 

funding to administer public banks would increase the 

availability of samples and reduce the need for private 

storage of cord blood. 

Obsolescence of cord blood as a source of stem cells 

The cord blood banking business exists as cord blood is a 

rich source of stem cells. However, if advances in medical 

technology allow alternatives to develop, the business model 

could be under threat. 

Entrance of new players 

There are currently very few players providing private cord 

blood banking services in the countries that Cordlife 

operates in. Hence, competition is less aggressive in the 

oligopolistic market structure. Entrance of new players could 

disrupt the competitive landscape.



8 April 2013 

Porter’s Five Forces 

On the whole, we believe that Cordlife has a fairly strong 

competitive business position. While supplier power is 

generally strong as Cordlife is a price taker of fees charged 

by hospitals and doctors, we believe that the company has 

the ability to pass on any price hikes to its customers. Entry 

barriers are fairly high as marketing efforts over the years 

have built significant amount of goodwill and brand 

recognition in the core markets. We believe that this makes 

it prohibitively costly for new entrants to penetrate their 

markets. 

7 of 21



8 April 2013 

Board of Directors and Senior Management 

Name Position Remarks 

Board of Directors 

Dr. Ho Choon Hou Chairman, Non-Executive 

Director 

- Appointed in June 2011. 

- Director at Southern Capital Group Ltd, Private Equity Firm. 

- Bachelor of Medicine & Bachelor of Surgery (The University of 

Sheffield), Masters in Medicine (Surgery) (National University of 

Singapore), MBA (Honours) (The University of Chicago) 

Ms. Jin Lu Non-Executive Director - Appointed in July 2011. 

- Executive Director of Golden Meditech Holdings (2000-2012) 

- Bachelor in Foreign Language (Beijing International Studies University), 

Executive MBA (Peking University). 

Mr. Ho Sheng Lead Independent Director - Appointed in July 2011. 

- Partner at Banamai Capital. 

- Bachelor of Economics (University of Tasmania), Master of Applied 

Finance (Macquarie University), an associate of the Institute of Chartered 

Secretaries and Administrators (UK), senior associate of the Australian 

Institute of Finance and Banking. 

Dr. Goh Jin Hian Independent Director - Appointed in July 2011. 

- Executive Consultant of Parkw ayHealth, Singapore. 

- Group Executive Director of IAG Heathsciences Pte Ltd. 

- Bachelor of Medicine and Bachelor of Surgery (National University of 

Singapore), MBA (University of Hull), The Wharton Advanced 

Management Program. 

Mr. Ng Tiak Soon 

Senior Management 

Independent Director - Appointed in November 2011. 

- Self employed consultant 

- Non-practicing member of the Institute of Certified Public Accountants, 

member of Association of Chartered Certified Accountants (UK), member 

of the Singapore Institute of Directors. 

Mr. Yee Pinh Jeremy CEO, Execuitive Director - Appointed CEO in June 2011, Executive Director since Jan 2004. 

- CFO of CBB prior to demerger in June 2011. 

- Bachelor of Arts in Economic and Social Studies (Victoria University of 

Manchester), Bachelor of Commerce (Murdoch University), Master of 

Commerce (University of Sydney), MBA (Nanyang Technological 

University), MBA (University of Chicago Booth School of Business). 

Ms. Gw endolene Yeo 

Teck Geok 

Ms. Cheung Wai Yee, 

Emily 

General Manager, 

Singapore 

General Manager, Hong 

Kong 

- Joined the group in Dec 2002. 

- Diploma in Mass Communication (Ngee Ann Polytechnic), Bachelor of 

Arts (Royal Melbourne Institute of Technology). 

- Joined the group in 2005. 

- Graduate Certificate in Business Administration, MBA (University of 

South Australia). 

Ms. Thet Hnin Yi Financial Controller - Joined group in June 2011. 

- Joined CBB as Senior Finance Manager in Dec 2007. 

- Diploma in Accountancy (Ngee Ann Polytechnic), a fellow of The 

Association of Chartered Certified Accountants (UK), non-practising 

member of the Institute of Certified Public Accountants of Singapore. 


8 of 21



8 April 2013 

Company Overview 

Cordlife Group (Cordlife) is a provider of cord blood and 

tissue banking services. Cordlife operates primarily in 

Singapore and Hong Kong, but offers indirect exposure to 

China with a 10% stake in China Cord Blood Corporation. 

The stock was listed on the mainboard of the Singapore 

Exchange on 29 th March 2012. 

Business Segments 

Cordlife generates approximately 75% and 25% of its group 

revenue from businesses in South Asia (mainly Singapore) 

and North Asia (mainly Hong Kong) respectively. South Asia 

contributes almost all the profits for the group with its 

business in North Asia only marginally profitable. Majority of 

its existing revenue is attributable to the cord blood banking 

services as the umbilical cord tissue banking services was 

only started recently (launched in Hong Kong: Mar 2011). 

This makes Cordlife a single product company that is highly 

dependent on the cord blood banking industry. 

Fig 14: Revenue by geography (S$’mn) 

30 

25 

20 

15 

10 

5 

0 

South Asia 

North Asia 

16.9 

5.7 

20.3 


19.2 

21.7 

7.9 6.5 7.1 


Fig 15: Profit by geography (S$’mn) 

12 

10 

8 

6 

4 

2 

0 

(2) 

Source: Cordlife, PSR est. 

6.9 

9.0 

0.8 0.2 

8.3 7.5 

(0.1) 

South Asia 

North Asia 

(0.0) 


*Profit contributions adjusted to remove contributions from 

associates and added IPO expenses to South Asia for FY12. 

What is cord blood banking? 

Cord blood is the blood that is removed from a baby’s 

umbilical cord at birth and is a rich source of stem cells. This 

provides an alternative to bone marrow as a source of stem 

cells that can be used for the treatment of various diseases. 

The risk free extraction is the main advantage of using cord 

blood, as compared to using bone marrow that requires a 

surgery. The process of collecting cord blood can be found 

on the company’s website: collection process. 

Subsequently, the cord blood that is extracted would need to 

be stored at very low temperatures for retrieval at a later 

date. 

9 of 21 

The cord blood that is stored is a perfect match for the baby, 

but it also has a high chance being compatible for the family 

members. Conceptually, we see it as similar to purchasing 

insurance for the baby and his/her family members. 

Public vs private cord blood banks 

Apart from private cord blood banking, such as services 

provided by Cordlife, public cord blood banks are also a 

source of cord blood. Cord blood samples that are stored at 

public banks are usually donated and could be used to 

support requirements from around the world. As such, unlike 

storing the person’s own cord blood at birth, a patient who 

requires cord blood for treatment may not be able to find a 

perfect match from public banks in the future. 

Singapore 

Singapore currently has 1 public and 2 private cord blood 

banking service providers. Singapore Cord Blood Bank 

(SCBB), the public cord blood bank in the country, holds 

inventories of 8,943 samples with diversity similar to the 

profile of Singapore’s ethnic groups. The samples held by 

the public bank are approximately 0.23% of the resident 

population (c.3.8mn) and 0.17% of the total population 

(c.5.3mn) in Singapore. Cordlife is the only AABB accredited 

private cord blood bank in Singapore. 

Fig 16: SCBB Cord Blood Inventory, as of 30 Sep 2012 

(‘k) 

Indian, 0.7 , 

8% 

Others, 1.0 , 

11% 

Malay, 1.7 , 

19% 

Chinese, 5.5 , 

62% 

Source: SCBB, PSR est. 

Fig 17: Singapore Resident Pop., as of 30 June 2012 (‘k) 

Others, 126 , 

3% 

Indian, 351 , 

9% 

Malay, 510 , 

13% 

Chinese, 

2,832 , 75% 

Source: Singstat, PSR est.



8 April 2013 

Population trends 

As with many developed nations, Singapore is currently 

experiencing a low level of fertility rate. At 2012’s Total 

Fertility Rate (TFR) of 1.28-1.30, Singapore is significantly 

below the replacement rate of 2.1. Consequently, 

Singapore’s government recently set a target to move the 

country’s TFR to 1.4-1.5 and had introduced an enhanced 

S$2bn “Marriage and Parenthood packages” to support this 

objective. Parents would receive a cash gift of S$6-8k for 

their newborn (1 st /2 nd : S$6k; 3 rd /4 th : S$8k) from the 

government and savings to a Child Development Account 

(CDA) would be matched dollar-for-dollar by S$6-18k (1 st /2 nd : 

S$6k; 3 rd /4 th : S$12k; >5 th : S$18k). This significantly 

subsidizes the cost of child rearing and benefits the private 

cord blood banking industry by supplementing the cost of 

using their services. 

Fig 18: Birth rates in Singapore 

55 

50 

45 

40 

35 

CY12 

CY11 

CY10 

CY09 

CY08 

CY07 

CY06 

CY05 

CY04 

CY03 

CY02 

CY01 

CY00 

CY99 

CY98 

CY97 

CY96 

CY95 

CY94 

CY93 

CY92 

CY91 

CY90 

Live birth in Singapore ('k), LHS 

TFR, RHS 

Source: SingStat 

42.6 

2.0 

1.9 

1.8 

1.7 

1.6 

1.5 

1.4 

1.3 

1.2 

1.1 

1.0 

Market share 

There is currently 2 private cord blood banking service 

providers in Singapore. While both Cordlife & StemCord do 

not breakdown the exact number of samples held in the 

country, Cordlife was estimated to have a market share of 

62% by deliveries in 2010. According to the company’s 

website StemCord stored more than 30k samples since 

2002, which is marginally lower than the > 40k samples held 

between Singapore and Hong Kong for Cordlife. 

Fig 19: Market share of private cord blood banks by 

deliveries in 2010 (‘k) 

Stemcord, 3.5 

, 38% 

Cordlife, 5.8 , 

62% 

Source: Cordlife, PSR (for CY2010) 

10 of 21 

Hong Kong 

Hong Kong has 1 public and 5 private cord blood banking 

service providers. There is very limited information on Hong 

Kong Red Cross, the only public cord blood bank in the 

country. However, according to a news article on the South 

China Morning Post, dated 18 th Sep 2012, the bank stored 

about 3,600 samples and had been in operation since 1998. 

The number of samples held by the public bank is 

approximately 0.05% of the total population of Hong Kong 

(c.7.2mn). 

Population trends 

Similar to Singapore’s population trend, TFR in Hong Kong 

remained below replacement levels at 1.25 in 2012. The 

birth rates in Hong Kong have improved significantly due to 

the influx of mainland women giving birth in Hong Kong. 

Within this group, babies born in Hong Kong, due to 

mainland women whose spouses are not Hong Kong’s 

permanent residence, increased significantly over the years 

(2011: 35.7k vs 2001: 0.6k). This was due to a court ruling in 

2001 stating that babies born in Hong Kong to mainland 

nationals have a right of abode in the country. However, this 

trend of increasing birth rates in Hong Kong had put a 

significant strain on the resources in the country. 

Consequently, a policy to restrict mainland women from 

giving birth in Hong Kong was imposed (2012 quota: private 

hosp. - 31.0k; public hosp. - 3.4k). This restriction is 

probably the reason for a decline in birth rates in 2012, 

despite the seasonally stronger birth rates in the dragon 

year. The Hong Kong government tightened this regulation 

further in mid 2012 and imposed a “zero delivery quota” 

policy for mainland women whose spouse are not Hong 

Kong resident from 2013 onwards. 

Fig 20: Birth rates in Hong Kong 

110 

100 

90 

80 

70 

60 

50 

40 

CY12 

CY11 

CY10 

CY09 

CY08 

CY07 

CY06 

CY05 

CY04 

CY03 

CY02 

CY01 

CY00 

CY99 

CY98 

CY97 

CY96 

CY95 

CY94 

CY93 

CY92 

CY91 

CY90 

Live birth in Hong Kong ('k), LHS 

TFR, RHS 

Source: HK Census & Statistics Dept 

Fig 21: Composition of live birth in Hong Kong 

110 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

Live birth due to Mainland women ('k) 

Live birth ex-Mainland woman ('k) 

% Mainland women 

Source: HK Census & Statistics Dept 

CY01 

CY02 

CY03 

CY04 

CY05 

91.3 

*Detailed breakdown of composition is not available for CY12. 

CY06 

CY07 

CY08 

CY09 

CY10 

CY11 

1.5 

1.4 

1.3 

1.2 

1.1 

1.0 

0.9 

0.8 

60% 

50% 

40% 

30% 

20% 

10%



8 April 2013 

Market share 

There is currently 5 private cord blood banking service 

providers in Hong Kong. Based on 2010 figures, Cordlife 

has a market share of 28% by deliveries in the year. Among 

these players, only the 3 largest players, Cryolife, Cordlife 

and Healthbaby have attained AABB accreditation. 

Fig 22: Market share of private cord blood banks by 

deliveries in 2010 (‘k) 

Smart Cells & 

Asia Pacific 

Stem Cells, 

0.2 , 4% 

Cryolife, 1.2 , 

23% 

Healthbaby, 

2.3 , 45% 

Cordlife, 1.5 , 

28% 

Source: Cordlife, PSR (for CY2010) 

Low fertility rate in core markets 

According to data from Central Intelligence Agency (CIA), 

Hong Kong and Singapore have among the lowest fertility 

rates in the world. However, these countries tend to have a 

higher level of wealth and disposable income, which we 

opine is a more important gauge of cord blood banking 

adoption levels. According to data from World Bank, 

Singapore has the highest level of healthcare expenditure 

per capita in the markets relevant to Cordlife. 

Fig 23: Fertility rate 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

Philippines 

53 78 81 104 175 184 221 223 224 

3.10 

Malaysia 

2.61 2.55 

India 

Indonesia 

2.20 

Thailand 

1.66 1.55 

China 

Children Born per Woman 

Ranking 

Hong Kong^ 

Source: CIA 

1.11 0.93 0.79 

Macao^ 

Singapore 

*CIA’s measure of fertility rates could differ from national standards 

as a result of factors including data availability, assessment, and 

methods and protocols. 

11 of 21 

Fig 24: Healthcare exp. & GDP per capita, 2010 (US$) 

2,000 

1,500 

1,000 

500 

0 

Philippines 

Healthcare exp. per capita (US$), LHS 

GDP per capita (US$'k), RHS 

Source: World Bank, PSR 

77 

368 

Malaysia 

India 

54 

Indonesia 

77 

Thailand 

179 221 

China 

1,563 

Hong Kong^ 

Macao^ 

1,733 

Singapore 

^Healthcare expenditure data for Hong Kong estimated from HK 

DOH & data for Macao not available. 

Insurance penetration rate as a gauge 

We believe that cord blood banking is conceptually similar to 

life insurance policies. The “insured” pays a premium to 

receive a “payout” when a situation arose. However, there 

are two distinct differences. While insurance policies can be 

bought at anytime in a person’s life, the decision to adopt 

cord blood banking can only be made once in a person’s life 

(i.e. at birth). Hence, the decision to bank one’s cord blood is 

highly time sensitive. The second difference is that while the 

“payout” for insurance policies is money; the “payout” for 

cord blood banking is the opportunity to utilize one’s stem 

cell to save his/her life. Due to the conceptual similarity, we 

believe that one can use insurance penetration history as a 

guide to the potential for cord blood banking. As compared 

to a population of 5.3mn, 4.9mn lives were insured in 

Singapore at the end of 2012. The no. of lives insured as a 

proportion of population in Singapore trended higher over 

the years at a rate of 3.2% p.a. from 25% in 1991 to 92% in 

2012. Hence, if the adoption of private cord blood banking 

takes a similar path as that of insurance penetration, there 

would be significant upside to the 24% market penetration 

rate for Singapore in 2010. 

Fig 25: Lives Insured vs Population in Singapore 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

2012 

2011 

2010 

2009 

2008 

2007 

2006 

2005 

2004 

2003 

2002 

2001 

2000 

1999 

1998 

1997 

1996 

1995 

1994 

1993 

1992 

1991 

No. of Lives Insured ('k) 

as % of Population 

Source: CEIC, PSR 

0% 

80 

70 

60 

50 

40 

30 

20 

10 

0 

100% 

80% 

60% 

40% 

20%



8 April 2013 

We believe that our target price of S$0.84 is 

conservative for the following reasons: 

1) Market penetration assumed to stagnate from CY15E. 

As shown in the discussion of our modeling assumptions, 

we have conservatively assumed stagnant market 

penetration after CY15E (Singapore: 38%; Hong Kong: 21%) 

and prefer to leave further penetration beyond CY15E as an 

upside risk to our valuation of the stock. 

2) Potential introduction of Umbilical Cord Tissue 

Banking in Singapore, yet to be built in. Currently, 

Cordlife only offers umbilical cord tissue banking services in 

Hong Kong. In Feb 2013, the company announced that it 

has entered into a strategic alliance agreement with 

CordLabs Asia to co-operate on providing similar services 

across various countries. With management currently 

exploring the possibility of introducing this service in 

Singapore, we believe that this could open up an additional 

revenue stream in the near future. However, until there is 

greater clarity on adoption of this new product, we prefer to 

leave this future revenue stream out of our model. 

3) Conservative valuation of its stake in CCBC. We were 

conservative in using the market price of CCBC as our 

valuation inputs. Our valuation of Cordlife would have 

increased by S$0.10 to S$0.94, if we had used consensus 

target price of US$5.50 as our valuation input. 

Fig 26: Market Price of CCBC 

3.40 

3.20 

3.00 

2.80 

2.60 

2.40 

2.20 

2.00 

Mar-12 

Apr-12 

May-12 

3.20 

Jun-12 

Jul-12 

2.41 

Aug-12 

Source: Bloomberg 

Sep-12 

Oct-12 

Nov-12 

Dec-12 

Jan-13 

Feb-13 

Stock Price (US$) 

4) Potential acquisition of fast growing emerging assets 

from CBB not factored in. Cordlife has a Right of First 

Refusal (ROFR) for the acquisition of various operating 

assets in Philippines, Indonesia & India from CBB, should 

the company decide to divest. Acquisition of these entities 

would provide Cordlife with geographical diversification into 

emerging markets that have higher birth rates and lower 

market penetration. As observed from the recent results of 

CBB, the Philippines portfolio had turned profitable with its 

sales in 1HFY13 (A$1.3mn) almost matching that of FY12 

(A$1.4mn). This implies that cash burn rate in the emerging 

markets could slow as its units start to turn profitable. So, 

what price to pay these assets? We believe that a reference 

point for these assets would be CBB’s market value of 

c.S$11.6mn (A$8.6mn based on market price of A$0.050), 

which could be fully funded with less than 2yrs of operating 

cashflow. 

Mar-13 

Apr-13 

May-13 

Jun-13 

12 of 21 

Fig 27: Revenue of emerging market in CBB (A$’mn) 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

Philippines 

India 

Indonesia 

0.1 

0.5 

1.2 

1.7 

1.4 

3.4 

1.3 1.0 1.0 0.7 

Source: CBB 

1.3 

2.2 

FY10 FY11 FY12 HY13 

Fig 28: Profits of emerging market in CBB (A$’mn) 

0.5 

0.0 

(0.5) 

(1.0) 

(1.5) 

(2.0) 

(2.5) 

(3.0) 

(3.5) 

Source: CBB 

(0.7) 

(0.8) 

(0.6) 

(1.5) 

(0.9) 

(0.6) 

(1.0) 

(0.8) 

(0.4) 

FY10 FY11 FY12 HY13 

Fig 29: Market Price of CBB 

0.10 

0.08 

0.06 

0.04 

0.02 

0.00 

Mar-12 

Apr-12 

0.080 

May-12 

Jun-12 

Jul-12 

Aug-12 

Source: Bloomberg 

Sep-12 

Oct-12 

Nov-12 

Dec-12 

Jan-13 

0.030 

Feb-13 

Mar-13 

0.3 

(0.1) 

(0.2) 

Philippines 

India 

Indonesia 

Market Price (A$) 

Apr-13 

May-13 

Jun-13



8 April 2013 

Key Drivers: 

We expect the number of live births in Singapore to 

moderate in CY13E to 38.0k, as we build in moderation after 

the seasonally stronger dragon year of 42.6k live births in 

CY12. In line with the long term population growth of 

Singapore, live births are assumed to increase at 1% a year. 

We modeled higher penetration rates and a 62% market 

share for Cordlife over the next few years and assumed that 

penetration rate sustain at 38% in CY15E and beyond. 

For the Hong Kong market, we expect live births at private 

hospitals to decline to 20.0k in CY13E due to restrictions on 

deliveries by mainland women as explained earlier. Similar 

to Singapore, live births are assumed to increase at 1% a 

year. We modeled a 28% market share and higher 

penetration rates over the next few years to a sustained 

level of 21% in CY15E and beyond. 

Our assumptions on the market penetration in Singapore 

and Hong Kong are in line with the market research report in 

Cordlife’s IPO prospectus by Deloitte & Touche Financial 

Advisory Services Limited. 

Fig 30: Key Model Assumptions 

13 of 21 

Key risks to our view: 

Market Penetration - While market penetration is 

expected to deepen for Cordlife’s core markets of 

Singapore and Hong Kong, actual increase in 

penetration rate may slow or not take place. 

Overpaying for emerging assets held by CBB - While 

acquisition of emerging assets held by CBB could 

provide growth beyond the matured markets, we believe 

that there is a risk of overpaying for them as it depends 

on the negotiation between the two parties. 

Regulatory - We believe that a change in regulatory 

regimes would have a significant impact on the business 

of Cordlife. For example, recent measures by the Hong 

Kong government to ban mainland women, who are not 

spouses of Hong Kong residents, from delivering in the 

country have effectively shrunk the number of live births 

and market size for the cord blood banking players. 

Model Build: 

Key assumptions CY13E CY14E CY15E CY16E CY17E CY18E CY19E CY20E CY21E CY22E CY23E CY24E 

Singapore 

Live Birth ('k) 38.0 38.4 38.8 39.2 39.5 39.9 40.3 40.7 41.1 41.6 42.0 42.4 

y-y (%) 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 

Penetration (%) 32.0% 35.0% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0% 

Cordblood bank deliveries ('k) 12.2 13.4 14.7 14.9 15.0 15.2 15.3 15.5 15.6 15.8 16.0 16.1 

Cordlife Market share (%) 62% 62% 62% 62% 62% 62% 62% 62% 62% 62% 62% 62% 

Hong Kong 

Live Birth ('k) 20.0 20.2 20.4 20.6 20.8 21.0 21.2 21.4 21.7 21.9 22.1 22.3 

y-y (%) 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 

Penetration (%) 16.9% 18.7% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 

Cordblood bank deliveries ('k) 3.4 3.8 4.3 4.3 4.4 4.4 4.5 4.5 4.5 4.6 4.6 4.7 

Cordlife Market share (%) 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 

Key model inputs FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY21E FY22E FY23E FY24E 

Client delivery ('k) 8.4 8.9 9.9 10.4 10.5 10.6 10.7 10.8 10.9 11.0 11.1 11.2 

Units stored ('k) 49.3 58.2 68.1 78.5 89.0 99.6 110.3 121.1 132.0 143.0 154.1 165.4 

Utilisation (%) 6.9% 8.2% 9.6% 11.1% 12.5% 14.0% 15.5% 17.1% 18.6% 20.1% 21.7% 23.3% 

Revenue (S$'mn) 33.8 36.8 41.2 44.4 46.2 48.1 50.0 51.9 53.8 55.8 57.7 59.7 

y-y (%) 17.6% 8.9% 11.8% 7.7% 4.2% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 

Gross Margin (%) 70.0% 70.5% 71.0% 71.0% 71.0% 71.0% 71.0% 71.0% 71.0% 71.0% 71.0% 71.0% 

Gross Profit (S$'mn) 23.7 26.0 29.3 31.5 32.8 34.1 35.5 36.8 38.2 39.6 41.0 42.4 

FCF (S$'mn) 7.9 9.6 9.6 10.2 10.6 11.2 11.7 12.3 12.8 13.4 13.9 

Terminal Value (S$'mn) 169.3 

WACC (%) 9.0% 

Terminal g (%) 1.0% 

Discounted FCF (S$'mn) 7.5 8.4 7.7 7.5 7.2 7.0 6.7 6.4 6.2 80.6 

Sum of Discounted FCF (S$'mn) 145.3 

Source: PSR est.



8 April 2013 

Scenarios 

Bullish view - Dreaming of the upside… What if cord 

blood banking continues to gain popularity? As with every 

trend, there are always tipping points that could result in 

mass adoption. For example, during initial introduction of 

mobile phones, not many would have imagined a market 

penetration of >100% in Singapore. In crafting our bullish 

view on the stock, we assumed that market penetration 

would continue to deepen over the next decade and sustain 

at 60% in Singapore and 40% in Hong Kong by 2022. We 

also used consensus TP of US$5.50/shr to value Cordlife’s 

stake in China Cord Blood. This valuation method would 

drive a target price of S$1.12. 

Fig 31: Bullish Valuation presents significant upside 


(Bullish view ) S$'mn S$ 


Stake in China Cord Blood Corp. 50.3 19% 0.22 Consensus TP (US$5.50/shr) 



Add: Cash 10.1 4% 0.04 

Less: Debt (5.5) -2% (0.02) 

Equity Value 260.0 100% 1.12 




F12M DPS (S$) 0.025 

Price upside (%) 73.6% 




77.5% 

Fig 32: Bearish Valuation close to current market price 


(Bearish view ) S$'mn S$ 


Stake in China Cord Blood Corp. 22.0 15% 0.09 Low est price in 1yr (US$2.41/shr) 



Add: Cash 12.9 9% 0.06 

Less: Debt (5.5) -4% (0.02) 

Equity Value 149.9 100% 0.64 




F12M DPS (S$) 0.025 

Price upside (%) -0.8% 




3.1% 

14 of 21 

Bearish view- What if the forecasted penetration did not 

materialize? We should also exercise caution and think 

about the downside. In this scenario, we assume that all the 

bullish views about increasing market penetration did not 

materialize and penetration levels stays at that of CY10 

(Singapore: 24.0%; Hong Kong 11.5%). We have also used 

the 1 year low of China Cord Blood of US$2.41/shr in this 

valuation model. This would lead to a valuation that is close 

to the current market price of S$0.64.



8 April 2013 

FYE June FY11 FY12 FY13F FY14F FY15F 

Valuation Ratios 

P/E (X), adj. 17.7 17.0 16.0 15.0 13.3 

P/B (X) n.m. 2.1 2.0 1.9 1.7 

EV/EBITDA (X), adj. 16.2 17.6 15.0 13.4 11.5 

Dividend Yield (%) n.m. 5.9% 3.9% 4.2% 4.7% 

Per share data (SGD) 

EPS, reported n.m. 0.030 0.052 0.043 0.048 

EPS, adj. 0.036 0.038 0.040 0.043 0.048 

DPS n.m. 0.038 0.025 0.027 0.030 

BVPS n.m. 0.306 0.330 0.348 0.369 

Grow th & Margins (%) 

Grow th 

Revenue -8.8% 12.1% 17.6% 8.9% 11.8% 

EBITDA -9.5% -7.7% 17.0% 11.9% 16.9% 

EBIT -11.5% -9.4% 15.1% 12.0% 19.3% 

Net Income, adj. 2.5% 4.2% 6.5% 6.2% 13.0% 

Margins 

EBITDA margin 34.3% 28.2% 28.1% 28.8% 30.2% 

EBIT margin 32.0% 25.8% 25.3% 26.0% 27.8% 

Net Profit Margin 33.0% 24.1% 35.7% 27.1% 27.4% 

Key Ratios 

ROE (%) 23.0% 12.4% 16.3% 12.7% 13.5% 

ROA (%) 14.8% 9.5% 12.5% 9.4% 10.0% 

Net Debt/(Cash) (3) (10) (3) (5) (8) 

Net Gearing (X) Net Cash Net Cash Net Cash Net Cash Net Cash 

Income Statement (SGD mn) 

Revenue 25.7 28.8 33.8 36.8 41.2 

EBITDA 8.8 8.1 9.5 10.6 12.4 

Depreciation & Amortisation (0.6) (0.7) (0.9) (1.0) (1.0) 

EBIT 8.2 7.4 8.6 9.6 11.4 

Net Finance (Expense)/Income 0.0 0.2 0.5 0.4 0.1 

Other items 0.0 (1.9) 2.7 0.0 0.0 

Associates & JVs 1.7 2.1 2.0 2.0 2.1 

Profit Before Tax 9.9 7.8 13.7 12.0 13.6 

Taxation (1.5) (0.9) (1.6) (2.0) (2.3) 

Profit After Tax 8.5 6.9 12.1 10.0 11.3 

Non-controlling Interest 0.0 0.0 0.0 0.0 0.0 

Net Income, reported 8.5 6.9 12.1 10.0 11.3 

Net Income, adj. 8.5 8.8 9.4 10.0 11.3 

Source: PSR 

15 of 21



8 April 2013 

FYE June FY11 FY12 FY13F FY14F FY15F 

Balance Sheet (SGD mn) 

PPE 4.3 6.1 10.1 9.6 9.4 

Intangibles 0.0 0.0 0.0 0.0 0.0 

Associates & JVs 15.1 17.7 27.4 29.4 31.5 

Investments 0.2 13.2 13.6 13.9 11.7 

Others 22.9 24.3 26.0 28.3 31.6 

Total non-current assets 42.5 61.2 77.1 81.3 84.2 

Inventories 0.2 0.4 0.4 0.4 0.4 

Accounts Receivables 7.1 9.2 10.0 10.9 12.2 

Investments 1.3 6.0 6.0 6.0 6.0 

Cash 4.0 12.9 8.5 10.1 14.0 

Others 0.3 0.5 0.5 0.5 0.5 

Total current assets 12.9 29.1 25.5 27.9 33.1 

Total Assets 55.4 90.4 102.6 109.2 117.4 

Short term loans 0.1 0.1 0.2 0.2 0.2 

Accounts Payables 4.3 3.9 5.5 5.9 6.5 

Others 3.7 4.3 4.3 4.3 4.3 

Total current liabilities 8.0 8.3 9.9 10.4 10.9 

Long term loans 0.8 2.5 5.3 5.3 5.3 

Others 6.0 8.5 10.7 12.6 15.2 

Total non-current liabilities 6.8 10.9 16.0 17.9 20.5 

Non-controlling interest 0.0 0.0 0.0 0.0 0.0 

Shareholder Equity 40.6 71.2 76.7 80.9 85.9 

Cashflow Statements (SGD mn) 

CFO 

PBT 9.9 7.8 13.7 12.0 13.6 

Adjustments (1.2) 0.5 (4.2) (1.4) (1.2) 

Cash from ops before WC changes 8.7 8.3 9.5 10.6 12.4 

WC changes 0.6 (0.6) 1.3 (0.8) (1.4) 

Cash generated from ops 9.4 7.7 10.8 9.8 11.0 

Taxes paid, net (1.4) (1.7) (1.6) (2.0) (2.3) 

Interest paid (0.0) (0.0) (0.1) (0.2) (0.2) 

Cashflow from ops 7.9 6.0 9.0 7.6 8.5 

CFI 

CAPEX, net (3.1) (2.4) (5.0) (0.5) (0.8) 

Dividends from associates & JVs 0.0 0.0 0.0 0.0 0.0 

Dividends/Interest from Investments 0.1 0.1 0.3 0.3 0.3 

Purchase/sale of investments (1.3) (17.7) (0.0) (0.0) 2.2 

Investments in subs & associates 0.0 0.0 (5.1) 0.0 0.0 

Others 0.0 0.0 0.0 0.0 0.0 

Cashflow from investments (4.3) (20.0) (9.9) (0.3) 1.7 

CFF 

Share issuance 0.0 26.0 0.0 0.0 0.0 

Purchase of treasury shares 0.0 0.0 0.0 0.0 0.0 

Loans, net of repayments 0.8 1.7 2.9 0.0 0.0 

Dividends to minority interests 0.0 0.0 0.0 0.0 0.0 

Dividends to shareholders & capital reduction 0.0 (4.7) (6.5) (5.8) (6.3) 

Others (8.1) 0.0 0.0 0.0 0.0 

Cashflow from financing (7.3) 23.0 (3.6) (5.8) (6.3) 

Net change in cash (3.6) 9.0 (4.4) 1.5 3.9 

Effects of exchange rates 0.3 (0.0) 0.0 0.0 0.0 

CCE, end 4.0 12.9 8.5 10.1 14.0 

Source: PSR 

16 of 21



8 April 2013 

Ratings History 

0.90 

0.80 

0.70 

0.60 

0.50 

0.40 

1 

2 

3 

4 

5 

Mar-12 

Market Price 

Target Price 

Jun-12 

Sep-12 


PSR Rating System 

Total Returns Recommendation Rating 

> +20% Buy 1 

+5% to +20% Accumulate 2 

-5% to +5% Neutral 3 

-5% to -20% Reduce 4 



8 April 2013 

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8 April 2013 

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Securities Research, including but not limited to its officers, directors, employees or persons involved in the 

preparation or issuance of this report, may at any time engage in any of the above activities as set out above or 

otherwise hold a interest, whether material or not, in respect of companies and investments or related investments, 

which may be mentioned in this publication. Accordingly, information may be available to Phillip Securities Research, 

or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, 

directors, employees or persons involved in the preparation or issuance of this report, which is not reflected in this 

material, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, 

including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this 

report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following 

its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, 

including but not limited its officers, directors, employees or persons involved in the preparation or issuance of this 

report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of 

this material. 

The information, tools and material presented herein are not directed, intended for distribution to or use by, any person 

or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the 

applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other 

requirement, or penalty for contravention of such requirements within such jurisdiction. 

Section 27 of the Financial Advisers Act (Cap. 110) of Singapore and the MAS Notice on Recommendations on 

Investment Products (FAA-N01) do not apply in respect of this publication. 

This material is intended for general circulation only and does not take into account the specific investment objectives, 

financial situation or particular needs of any particular person. The products mentioned in this material may not be 

suitable for all investors and a person receiving or reading this material should seek advice from a professional and 

financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such 

products, taking into account the specific investment objectives, financial situation or particular needs of that person, 

before making a commitment to invest in any of such products. 

Please contact Phillip Securities Research at [65 65311240] in respect of any matters arising from, or in connection 

with, this document. 

This report is only for the purpose of distribution in Singapore. 

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8 April 2013 

Contact Information (Singapore Research Team) 

Chan Wai Chee Joshua Tan Derrick Heng 

CEO, Research Head of Research Deputy Head of Research 

Special Opportunities Global Macro, Asset Strategy 

SG Equity Strategist & 

Transport 

+65 6531 1231 +65 6531 1249 +65 6531 1221 

yebo@phillip.com.sg joshuatan@phillip.com.sg derrickhengch@phillip.com.sg 

Go Choon Koay, Bryan Ken Ang Ng Weiwen 

Investment Analyst Investment Analyst Macro Analyst 

Property Financials, Telecoms Global Macro, Asset Strategy 

+65 6531 1792 +65 6531 1793 +65 6531 1735 

gock@phillip.com.sg kenangwy@phillip.com.sg ngww@phillip.com.sg 

Roy Chen Nicholas Ong Research Assistant 

Macro Analyst Investment Analyst General Enquiries 

Global Macro, Asset Strategy Commodities, Offshore & Marine +65 6531 1240 (Phone) 

+65 6531 1535 +65 6531 5440 research@phillip.com.sg 

roychencz@phillip.com.sg nicholasonghg@phillip.com.sg 

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8 April 2013 

Contact Information (Regional Member Companies) 

SINGAPORE 

Phillip Securities Pte Ltd 

Raffles City Tower 

250, North Bridge Road #06-00 

Singapore 179101 

Tel +65 6533 6001 

Fax +65 6535 6631 

Website: www.poems.com.sg 

HONG KONG 

Phillip Securities (HK) Ltd 

Exchange Participant of the Stock Exchange of Hong Kong 

11/F United Centre 95 Queensway 

Hong Kong 

Tel +852 2277 6600 

Fax +852 2868 5307 

Websites: www.phillip.com.hk 

INDONESIA 

PT Phillip Securities Indonesia 

ANZ Tower Level 23B, 

Jl Jend Sudirman Kav 33A 

Jakarta 10220 – Indonesia 

Tel +62-21 5790 0800 

Fax +62-21 5790 0809 

Website: www.phillip.co.id 

THAILAND 

Phillip Securities (Thailand) Public Co. Ltd 

15th Floor, Vorawat Building, 

849 Silom Road, Silom, Bangrak, 

Bangkok 10500 Thailand 

Tel +66-2 6351700 / 22680999 

Fax +66-2 22680921 

Website www.phillip.co.th 

UNITED KINGDOM 

King & Shaxson Capital Limited 

6th Floor, Candlewick House, 

120 Cannon Street, 

London, EC4N 6AS 

Tel +44-20 7426 5950 

Fax +44-20 7626 1757 

Website: www.kingandshaxson.com 

AUSTRALIA 

PhillipCapital 

Level 12, 15 William Street, 

Melbourne, Victoria 3000, Australia 

Tel +61-03 9629 8288 

Fax +61-03 9629 8882 

Website: www.phillipcapital.com.au 

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MALAYSIA 

Phillip Capital Management Sdn Bhd 

B-3-6 Block B Level 3 Megan Avenue II, 

No. 12, Jalan Yap Kwan Seng, 50450 

Kuala Lumpur 

Tel +603 2162 8841 

Fax +603 2166 5099 

Website: www.poems.com.my 

JAPAN 

Phillip Securities Japan, Ltd. 

4-2 Nihonbashi Kabuto-cho Chuo-ku, 

Tokyo 103-0026 

Tel +81-3 3666 2101 

Fax +81-3 3666 6090 

Website:www.phillip.co.jp 

CHINA 

Phillip Financial Advisory (Shanghai) Co. Ltd 

No 550 Yan An East Road, 

Ocean Tower Unit 2318, 

Postal code 200001 

Tel +86-21 5169 9200 

Fax +86-21 6351 2940 

Website: www.phillip.com.cn 

FRANCE 

King & Shaxson Capital Limited 

3rd Floor, 35 Rue de la Bienfaisance 75008 

Paris France 

Tel +33-1 45633100 

Fax +33-1 45636017 

Website: www.kingandshaxson.com 

UNITED STATES 

Phillip Futures Inc 

141 W Jackson Blvd Ste 3050 

The Chicago Board of Trade Building 

Chicago, IL 60604 USA 

Tel +1-312 356 9000 

Fax +1-312 356 9005

Cordlife Group Ltd - Phillip Securities Pte Ltd

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