Excerpts from SCCM (SooChow CSSD Capital Markets) report on Cordlife
Analyst: Simeon Ang
3Q21 results saw uptick; Visit to RCS sales booth
|9M21 revenue/NPAT met 65%/93% of our trimmed expectations as CLGL saw quarterly growth in overall performance.
Nonetheless, we believe that FY21E will continue to be a challenging year for CLGL, with a potential for a stronger recovery only in FY22E.
Our TP of S$0.47, derived from LTV of CLGL clients and DCF, valuing CLGL at an undemanding 7.1x FY22E ex-cash P/E. Maintain BUY.
3Q21 results saw an uptick: 9M21 revenue/NPAT continued to be battered by Covid19, slipping 5%/14% YoY, respectively to S$35.9m/S$4.3m or 65%/93% of our trimmed FY21E estimates.
Notwithstanding, 3Q21 revenue grew 9% YoY (2Q21: +1%) to S$12.7m.
This was attributable to resumption of revenue growth in banking (+7% YoY) as well as continued strength in diagnostics (+37% YoY).
3Q21 gross margin also expanded 3.7ppt YoY to 64.1% likely due to growth in banking revenue as well as successful PH client conversions towards higher-value banking plans.
3Q21 NPAT was 26% YoY lower at S$1.8m, likely due to lower government grants.
Site visit to Raffles City Singapore (RCS) sales booth: Management shared that it had recently opened a point-of-sales presence at RCS, level 3, inside Mummy’s Market.
We visited on a weekend where we observed significant shopper traffic to Mummy’s Market but failed to see any activity at CLGL’s space.
This could potentially be due to scheduling issues and/or difficulty in securing resources.
Nonetheless, we believe that the presence could prove to be a strong sales conversion channel in lieu of mega exhibition events that were previously held at Singapore Expo.
New shareholders could provide new impetus/guidance: Based on exchange filings, CLGL saw married trades for 71.5m shares at S$0.52 apiece (S$37.2m) between Hon Kwok Lung (vendor) and TransGlobal (acquirer).
In line with the trade, CLGL is expected to see the replacement of two directors on its board. TransGlobal is 50:50 held by Lui Yim Sheng and Yiu Chi Shing and is in the real estate business.
Recall our valuation takes into consideration the lifetime value of CLGL’s clients of SGD124.08.
Our FY22E forecasted cash and near-cash assets amounts to SGD81.5m or c.75% of current market cap.
A key risk to our forecasts would be further lockdowns across key markets, affecting both parents’ willingness to have babies and reducing marketing channels. Reiterate BUY, TP S$0.47/share. We maintain TP of S$0.47/share, which values CLGL at 21.6x FY22E P/E or at an undemanding 7.1x ex-cash P/E.