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Cordlife Group Ltd’s Near A 52-Week High – Is There More Room To Run?

Singapore’s stock market hasn’t done too well of late with the Straits Times Index (SGX: ^STI) closing yesterday at nearly 20% lower than its 52-week high of 3,550 points that was reached in April.

But, that doesn’t mean that all stocks have had a rough time too. Cordlife Group Ltd (SGX: P8A) would be one share that has bucked the trend. At their closing price of S$1.40 yesterday, Cordlife’s shares are a mere 4% away from their 52-week high of S$1.46.

Listed three years ago in 2012, Cordlife specialises in umbilical cord blood and cord lining banking services in Asia.

(According to Cordlife, cord blood is the blood that remains in the umbilical cord and placenta following the birth of a baby. Cord blood, which is a rich source of hematopoietic stem cells, can be used if there’s ever a need for stem cell transplants in the treatment of cases like genetic defects and blood cancers, among other medical ailments.)

Cordlife’s one of the first few companies to provide private cord blood banking services in Asia and it today commands the largest market share among private cord blood banks in Singapore, Indonesia, and the Philippines.

While Cordlife’s near a peak today, there may be reasons to believe that there’s more room to run. Here’re a few:

  • Rising affluence in Asia and growing awareness can drive demand for cord-blood banking.
  • Singapore’s falling birth rate is not something new. But, a series of new pro-family measures that the government is implementing (such as enhanced Baby Bonus schemes, higher Medisave Grants, and more paternity leave) may help stem the tide. More babies means more potential business for Cordlife to win.
  • In the fiscal year ended 30 June 2015 (FY2015), Cordlife’s results look healthy with a 17% and 4% increase in its top-line and bottom-line, respectively. The company’s not resting on its laurels and will be launching adjacent products and services into all its markets in FY2016.
  • Golden Meditech Holdings Limited, an integrated medical devices and healthcare services player in China, will be buying shares of China Cord Blood Corporation and bonds issued by the same company that are held by Cordlife. According to Cordlife’s presentation materials for the sale, it stands to receive a net cash inflow of S$95.8 million from the transactions. Cordlife’s number-crunching for its net cash flow assumes that the deal will be completed on 16 November 2015.

Foolish Takeaway

Investors are often troubled by the fact that shares which are near record highs may drop or pull back a great deal after any perceived euphoria is over.

But it’s good to keep in mind that, over the long run, the share prices of great companies will continue breaking new highs as long as their business fundamentals remain intact. So, will Cordlife be able to deliver handsome returns going forward? That would heavily depend on its businesses performance amongst other factors. Only time will tell.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.