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China Cord Blood: Speculator's Radar;
(From Briefing.com) the first and the largest cord blood banking operator in China, thinly traded though (5.70 +0.09)
Many of the biggest winners in 2009 have been Chinese stocks that have moved from the bulletin boards to a listed exchange. Some examples include: RINO +460%, YUII +290%, YONG +280%, CMFO +260%. Over the past week or so, we have profiled a series of companies that fit this description: Gulf Resources (GFRE), a bromine producer, China Biologic (CBPO), the largest non-state-owned plasma-based biopharma co in China, and China Gerui (CHOP), the largest Chinese manufacturer of high precision cold-rolled narrow strip steel. All can be found in the InPlay archive using PROFX as the search ticker.
Today, we wanted to take a look at another interesting name: China Cord Blood (CO), the first and the largest cord blood banking operator in China. It made the move from the bulletin boards to the NYSE just about a month ago. China Cord Blood is a provider of cord blood banking services in China. Expectant parents pay the co to process and store the cord blood of their children at birth for potential future use in medical treatment. CO charges an initial processing fee at birth and a storage fee each year. CO also preserves cord blood units donated by the public and charge fees to patients in need of transplants when there is a match, but this accounts for only a small percentage of sales.
CO has benefitted from the Chinese govt's "one license per region" policy, allowing each cord blood bank licensee to operate without competition. CO has a partnership with over 90 major hospitals in Beijing, China's second largest city, and it acquired the right to operate in Guangdong, the most populous province in China, through the acquisition of Nuoya in May 2007. Currently, CO is the sole cord blood banking licensee in Beijing and Guangdong. So far, cord blood banking licenses have been issued for only six of China's 31 regions, and CO owns two of them. However, another four licenses are expected to be issued in 2010. CO's existing operations cover an aggregate population of 110 mln people, including 94 mln in Guangdong, which is larger than all but 12 countries in the world. There were 1.2 mln newborns in Beijing and Guangdong in 2007.
The co expects demand to continue to increase due to rising disposable incomes in urban areas; greater attention to health issues; an emphasis on children under China's one-child policy; and heightened public awareness of the benefits of cord blood storage. The financials look great as the co is profitable and Q2 (Sep) revenue rose 30.4% yr/yr to $9.4 mln, with huge operating margin of 37%. Subscribers currently total 105,812 with 21,752 new subs signed up in 1H09, up 47% yr/yr. The co is highly profitable, but having to spread net income across a pretty high share count (66.1 mln) makes the P/E valuation somewhat high (no ests) and it results in a $380 mln market cap, which is on the high side for a co with $18 mln in revs for the 6 mos ended Sep 30.
Bottom Line, any Chinese stock trading below $10 is likely a speculative idea, including CO. However, based on the moves of some of these other undiscovered names, these stocks have the potential to be big winners. The primary concern with CO is that the Chinese govt's "one license per region" policy could change at anytime and lead to greater competition. On the positive side, the application process to become a cord blood banking licensee takes several years and is expensive, which should help to discourage more entrants. Another concern is the heavy float at 65 mln shares, light volume (has cracked 100k share volume only once in the last 16 days) and a fairly high share count (see above).
However, CO looks attractive overall as China's first and largest cord blood bank operator. This is an emerging technology in the most populous country on earth. By holding two of the six cord blood banking licenses in China and being the exclusive operator in the Beijing municipality and Guangdong province, the co has the potential to dominate this market over the coming years and it is looking to acquire other licensees. Mkt cap $380 mln, float 65 mln, avg vol 43k.
thanks - this one was a bit of a gut-check along the way, and the story isn't over yet! I still may end up striking out...we'll see.
nice job finding this diamond in the rough steel AND nice job sticking to your original strategy (which i find is the hardest part sometimes)
g/l!
Here we go again! - I have no idea what's going on here with all the volume, but it's starting to move quicker and I am loving it! My thesis has been to swing for the homerun on this one, and that hasn't changed. Still shooting for a 5-10 bagger on .50 entries.
Thx for all the info Jason. The warrants got a big lift today while the stock was ignored ... lets see if someone is loading up on the warrants prior to a big institution loading up on the common shares.
Very interesting...thanks.
Oh no problem. Below is a list of the 47 global market companies identified in the report.
66 major players identified with only 15 identified across at least 7 countries in Asia Pacific Like you said, CO's probably identified in the report as the major player for China.
The study includes 129 charts (includes a data table and graphical representation for each chart), supported with meaningful and easy to understand graphical presentation, of market numbers. The statistical tables represent the data for the global market value in USD by geographic regions and the product segments.
The report analyses the cord blood stem cells market for global and the regional markets including North America, Europe, Asia-Pacific and Rest of World. The regional markets further analyzed for 21 independent countries across Europe - The United Kingdom, Germany, France, Spain, Russia, Sweden, Switzerland and Rest of Europe; North America - the United States, Canada and Mexico; Asia-Pacific - India, China, Japan, Australia, South Korea, Hong Kong, Singapore and Rest of Asia-Pacific; Rest of World - Brazil, Columbia, Argentina and Israel.
This study profiles 47 key global players and 63 major players across North America - 33; Europe - 10; Asia-Pacific - 15; and Rest of World - 5. The report also provides the listing of the companies engaged in collection, processing and banking of cord blood stem cells. This list also includes the companies engaged in the treatment of deadly diseases using CB stem cells. The global list covers the addresses, contact numbers and the website addresses of 219 private and 75 public cord blood banks.
Major Global Market Players
Advanced Cell Technology, Inc.
AlphaCord
Carolinas CBB
CorCell
Cord Blood America Inc.
Cord Blood Registry
Coriell
CryoBanks International
Cryo-Cell International
DomaniCell, LLC
Family CB Services
Geron Corporation
J.P. McCarthy Cord Stem Cell Bank
Life Source
LifeBankUSA
New England Cord Blood Bank
NYBC National Cord Blood Program
Osiris Therapeutics, Inc.
StemCell Technologies Inc.
ViaCord, Inc
Cells for Life
HemaStem Therapeutics
Cordon Vital
Angel Biotechnology
Future Health Technologies
Life Cells
Eticur
Banco De Celulas Madre
Swiss Blood Stem Cells
Vita Cord
Activision Life SA
Cryo Stemcell (Kar) Pvt. Ltd
Reliance Life Sciences
Golden MediTech Company
Shandong Umbilical Cord Blood Center
Stem Cell Institute
BioCell
CyGenics Ltd
Sydney Cord Blood Bank
Life Cord
Cord Life Ltd
Singapore Cord Blood Bank, Ltd.
Cord Bank
CryoCord
Stem Life
BioCord
Cryo-Save
Very interesting report I thanks for that. I wonder what the list of companies is comprised of. I know one thing though, CO is it for china! NBS maybe on a smaller scale. Wouldn't surprise me at all for an institution buying the warrants instead of the common because the common would move too far if one purchased a million+ shares on the open mkt. If I recall, there are about 10-12M warrants, hence the increased liquidity
Cord Blood Stem Cells Market to Hit US$15 billion by 2015
Report Buyer, the online destination for business intelligence for major industry sectors, has added a new market report
FOR IMMEDIATE RELEASE
PR Log (Press Release) – Dec 15, 2009 – Report Buyer, the online destination for business intelligence for major industry sectors, has added a new market report analysing Cord blood stem cell technologies including: Stem Cell Transplant, Cord Blood Banking, Blood Transfusion, Cell Based Genetics and Xenotransplant. The report also analyses the global market for stem cell therapeutic areas comprising Neurology, Oncology, Cardiology, Cartilage, Blood Disorders, Diabetes, Dermatology and Other.
According to the report “Cord Blood Stem Cells: A Global Market Overview” available at http://www.reportbuyer.com/go/INX00004 umbilical cord and placenta, once considered medical waste have emerged to be a valuable source of stem cells. The cord blood stem cells show the potential to treat fatal diseases such as leukemia, cardiac attacks and debilitating diseases including Alzheimer's and Parkinson's. Cord blood stem cells are also widely used in therapies such as blood disorders, bone and tissue engineering, dermatology.
Global cord blood stem cells market for 2010 is estimated at about US$4.5 billion. The market is further projected to register a robust CAGR of 27.3% during the period 2006-2015 to reach US$15 billion by 2015. The report provides a listing of the companies engaged in collection, processing and banking of cord blood stem cells. This list also includes the companies engaged in the treatment of deadly diseases using CB stem cells.
The report “Cord Blood Stem Cells: A Global Market Overview” is available from Report Buyer at:
http://www.reportbuyer.com/pharma_healthcare/biotechnolo ...
Report Buyer product ID: INX00004
About Report Buyer.
Report Buyer
(http://www.reportbuyer.com/pharma_healthcare/biotechnolo ...) is the independent online store for global business information. The website now lists more than 100,000 company overviews, market research reports, industry studies and business books from over 300 specialist publishers. Thousands of professionals from across the world make ReportBuyer.com their first choice in their search for quality business insight.
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Report Buyer is a UK-based independent online store supplying business information on major industry sectors. These include the Automotive Industry, Banking & Finance, Energy & Utilities, Food & Drink, Telecoms and Pharma & Healthcare
Improving Chronic Hepatitis Outlook: Umbilical Cord Blood
December 16, 2008
Printer-friendly version
A potential alternative to liver transplant surgery, stem cells from umbilical cord blood may be the solution that those living with chronic hepatitis have been looking for.
by Nicole Cutler, L.Ac.
Once chronic hepatitis has progressed to the end stages of liver disease, there is only one medically accepted option for a person’s recovery. Despite organ transplantation currently being the only choice for helping someone with a non-functioning liver, researchers from Spain are bringing another avenue of hope to those with end stage liver disease. By finding that umbilical cord blood may offer an effective alternative to liver transplants and a potential strategy to treat chronic hepatitis, Spanish scientists could have forever changed the outlook of chronic hepatitis.
About Umbilical Cord Blood
Harvested from the umbilical cord right after a baby is born, stem-cell containing umbilical cord blood is retrieved after the cord has been clamped and cut. Highly coveted by modern medicine, stem cells have the ability to grow into any one of the body’s specialized cells.
Although they are concentrated in cord blood, few stem cells are collected from this source because the total amount of blood from an umbilical cord is small. Despite the challenge of obtaining the quantity needed, stem cells from the umbilical cord have exceptional applications because they are unlikely to cause a graft-versus-host disease after a transplant.
Cord blood cell transplants are already becoming common as a therapy for diseases of the blood. While stem cells from umbilical cord blood appear to be a medicinal panacea, obstacles ranging from possible side effects to political opposition have thwarted their full therapeutic potential.
Cord Blood Stem Cells for the Liver
Fueled by encouraging research that surfaced five years ago, a recently conducted study has demonstrated that stem cells obtained from umbilical cord blood offer real hope for those with chronic hepatitis.
· The Earlier Research – Appearing in the journal Blood in 2003, Xiuli Wang and coworkers transplanted specialized stem cells obtained from umbilical cord and bone marrow into immuno-deficient mice to evaluate a stem cell-based treatment strategy for liver disease. Based on their expression following liver damage, the researchers concluded that bone marrow and umbilical cord stem cells should be considered as an effective treatment strategy for liver diseases.
· Recent Research – To be published in an upcoming issue of Cell Transplantation, a collaborative study conducted by Spanish scientists concluded that mononuclear blood cells derived from the human umbilical cord blood may be useful in the treatment of liver disease, such as hepatitis. The researchers introduced human umbilical cord blood cells through the hepatic portal vein of mice with induced hepatitis. Subsequently, they found a significant improvement in both histological damage and the hepatic function of the animals following cell transplantation.
Today, the need for donor livers far outpaces the supply as more people with chronic hepatitis reach the end stages of liver disease. If future studies using stem cells from umbilical cord blood continue to prove their effectiveness against liver disease, the Spanish research results announced in July of 2008 will be heralded as a major advancement in the field of regenerative hepatic medicine. In addition to the prestige this success could bring, stem cells from umbilical cord blood could become the victor over chronic hepatitis that we’ve all been waiting for.
References:
http://bloodjournal.hematologylibrary.org/cgi/content/abstract/2002-05-1338v1, Albumin expressing hepatocyte-like cells develop in the livers of immune-deficient mice transmitted with highly purified human hematopoietic stem cells, Xiuli Want, et al., Retrieved July 20, 2008, Blood, American Society of Hematology, December 2002.
http://ngm.nationalgeographic.com/ngm/0507/feature1/, The Power to Divide: Stem Cells, Rick Weiss, Retrieved July 20, 2008, National Geographic Society, 2008.
http://news.nationalgeographic.com/news/pf/96995126.html, Umbilical Cord Blood: The Future of Stem Cell Research?, Erica Lloyd, Retrieved July 20, 2008, National Geographic Society, April 2006.
http://prensa.ugr.es/prensa/research/verNota/prensa.php?nota=552, Scientists use stem cells from the umbilical cord to treat hepatic diseases, Luis G Fontana, Retrieved July 17, 2008, University of Granada, 2008.
http://www.bchealthguide.org/kbase/topic/special/uq1027spec/sec1.htm, Umbilical Cord Blood Stem Cells, Retrieved July 20, 2008, Healthwise, Incorporated, 2008.
http://www.medinewsdirect.com/?p=533, Umbilical Cord Blood Derived Stem Cells Used to Treat Liver Disease, Retrieved July 17, 2008, MediNEWS.Direct!, July 2008.
if i had to guess somebody is loading up on the warrants.. and is then going to send the low float CO to the moon
I can't look!
I sold my CNDWF waaay too early :(
Well, we can assume ARCA has about 1MM warrants now, lol
What in tarnations is going on here? I mean, I'm loving it, but I wish I understood it!
Of course the underlying question is who is doing all the buying thru ARCA? ARCA is not an MM, so it could be you, me, Goldman, Soros...ok, i'm getting carried away ;)
At least we know which MM is gonna have all the shares ... ARCA has been all over this and he's at it again.
It's really quite amazing to see these huge blocks going off. I can't remember how many warrants are outstanding off the top of my head, but I don't think this ARCA buyer is buying them for no reason! But the other side of the coin is who could be selling in such volume and why!?! Gotta love it.
ARCA back for 99k at $1.16 ... he's really loading up
Yes, very strange volume spike ... ARCA loaded up around $1.20 and cleared the other big sellers.
Considering these dont expire for another 12 months, this is a great long-term investment.
What a battle going on with the warrants. Not much movement, but fun to watch. 20x daily volume already
Who knows how it'll end up, but it's very interesting at the least, considering that the common isn't moving ahead as an impetus.
Thx for the heads-up ... got a few K around $1 the other day, adding more thx to this 100k buyer on bid support
CNDWF 100k bidder; have never seen that before; big volume yesterday too, so wonder what's up.
China Cord Blood Corporation Announces Results for the Quarter and Six Months Ended September 30, 2009
HONG KONG, Dec. 11 /PRNewswire-Asia-FirstCall/ -- China Cord Blood Corporation ("CCBC" or "the Company") (NYSE: CO - News), China's leading provider of cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services, today announced its unaudited financial results for the quarter and six months ended September 30, 2009.
Highlights as of September 30, 2009
-- For the quarter ended September 30, 2009, net revenue increased 30.4%
year-over-year to RMB63.9 million (US$9.4 million) from RMB49.0 million.
Fiscal year first half net revenue reached RMB121.8 million
(US$17.8 million), up 48.7% year-over-year from RMB81.9 million.
-- For the quarter ended September 30, 2009, storage fees accounted for
17.4% of total net revenue, up 3.2 percentage points year-over-year
from 14.2%.
-- The Company had 11,371 new subscribers sign-up during the quarter ended
September 30, 2009, up 19.0% from 9,552 in the same period last year.
As of September 30, 2009, the total accumulated number of subscribers
reached 105,812.
-- The Company had an aggregate of 21,752 new subscribers signed up during
the first half of fiscal year 2010, up 47.1% year-over-year from 14,789.
-- Gross profit for the quarter and six months ended September 30, 2009
amounted to RMB46.3 million (US$6.8 million) and RMB87.9 million
(US$12.9 million) respectively, representing gross margins of 72.4% and
72.2%.
-- Non-GAAP EBITDA for the quarter and six months ended September 30, 2009
amounted to RMB28.9 million (US$4.2 million) and RMB56.7 million
(US$8.3 million) respectively.
-- RMB24.1 million (US$3.5 million) operating income was recorded for the
quarter ended September 30, 2009 despite the increase in administrative
expense. Fiscal year 2010 first half operating income rose 39.9% to
RMB47.2 million (US$6.9 million) from RMB33.7 million in the same
period last year.
-- Quarter ended September 30, 2009, net income attributable to
China Cord Blood Corporation shareholders was RMB17.6 million (US$2.6
million). Net income attributable to shareholders for the six months
ended September 30, 2009 was RMB13.0 million (US$1.9 million).
-- For the quarter ended September 30, 2009, basic EPS and fully diluted
EPS attributable to ordinary shares were RMB0.29 (US$0.04) and RMB0.27
(US$0.04), respectively. For the six months ended September 30, 2009,
basic EPS and fully diluted EPS attributable to ordinary shares were
RMB0.12 (US$0.02) and RMB0.11 (US$0.02), respectively.
-- Non-GAAP basic earnings per share attributable to shareholders for the
quarter and six months ended September 30, 2009 amounted to RMB0.29
(US$0.04) and RMB0.57 (US$0.08), respectively.
Summary - The quarter and six months ended September 30, 2009 and 2008
Three Months Ended Six Months Ended
September 30, September 30,
2009 2008 2009 2008
US$ RMB RMB US$ RMB RMB
(in thousands except percentage and operating data)
Revenue 9,361 63,897 48,988 17,847 121,826 81,935
Gross Profit 6,778 46,265 37,321 12,882 87,938 59,760
Operating Income 3,537 24,144 24,832 6,914 47,199 33,735
Non-GAAP EBITDA 4,237 28,924 26,548 8,308 56,711 37,088
Net Income/(Loss)
Attributable to
China Cord Blood
Corporation
Shareholders 2,584 17,639 5,779 1,911 13,047 (12,260)
EPS Attributable to
Ordinary Shares
- Basic 0.04 0.29 (0.01) 0.02 0.12 (0.43)
Non-GAAP EPS
Attributable to
Shareholders - Basic 0.04 0.29 0.10 0.08 0.57 (0.21)
Net Revenue
Breakdown (%)
Processing Fee 82.3% 84.9% 82.7% 83.1%
Storage Fee 17.4% 14.2% 16.7% 15.7%
Others 0.3% 0.9% 0.6% 1.2%
New Subscribers (persons) 11,371 9,552 21,752 14,789
Accumulated Total Number
of Subscribers (persons) 105,812 64,171 105,812 64,171
"We completed the second quarter with encouraging results," said Ms. Ting Zheng, China Cord Blood Corporation's chairperson and chief executive officer. "As our prior efforts in cultivating the two markets are just starting to bear fruits, it is a great joy to see strong demand in both Beijing municipality and Guangdong province. China's one child policy, rising public awareness of umbilical cord blood stem cells and our effective marketing and promotion strategies are important elements which contributed to our successful market penetration. As the exclusive operator in the Beijing municipality and Guangdong province, we continue to see growth in our local markets thanks to the large addressable market size and their severe under penetration. Following the commencement of our new Beijing storage facility and Guangdong storage facility, we are well equipped to capture the opportunities present in these existing two markets."
Ms. Zheng continued, "Our recent listing on the New York Stock Exchange marks a new era in our corporate history. It is a recognition of our company's achievements as well as our team's dedicated effort. The listing platform offers access and tools for growth, and with our proven execution capabilities, together form a solid foundation and paves the way for the next phase of corporate development. As China's first and largest cord blood bank operator, we will continue to leverage on our industry expertise and first mover advantage to seize opportunities arising in China and the Asia Pacific region."
Financial Results for the Second Fiscal Quarter Ended September 30, 2009
Revenue
Net revenue for the quarter ended September 30, 2009 increased 30.4% year-over-year to RMB63.9 million (US$9.4 million) from RMB49.0 million. Net revenue generated from processing fees recorded a 26.5% increase year-over-year to RMB52.6 million (US$7.7 million) due in part to the 11,371 new subscribers signed up during the quarter, which increased from 9,552 new subscribers for the same period last year. Net revenue from storage fees increased 60.1% to RMB11.1 million (US$1.6 million) as our total subscriber base continued to expand. The total accumulated number of subscribers reached 105,812 as of September 30, 2009, up from 64,171 subscribers as of September 30, 2008. For the quarter ended September 30, 2009, processing fees and storage fees accounted for 82.3% and 17.4% of total net revenue, respectively, compared to 84.9% and 14.2% for the same period last year.
Gross Profit
Gross profit reached RMB46.3 million (US$6.8 million), up from RMB37.3 million for the same period last year, representing a gross margin of 72.4%. Gross margin was 3.8 percentage points lower year-over-year following the commencement of the new Beijing storage facility and the new Guangdong storage facility which came on line in April 2009 and September 2008, respectively. Direct cost for the quarter ended September 30, 2009 was RMB17.6 million (US$2.6 million) which was higher than the RMB11.7 million for the same period last year mainly due to the increase in overhead after the new facilities commenced operation.
Sales and Marketing Expense
Despite the ongoing marketing effort, management continued to tightly monitor sales and marketing expense. Sales and marketing expense as a percentage of net revenue declined from 15.1% last year to 14.8% for the quarter ended September 30, 2009. Total sales and marketing expense for the quarter ended September 30, 2009 was RMB9.5 million (US$1.4 million), an increase of 28.3% from RMB7.4 million for the same period last year.
General and Administrative Expense
To cope with the rising demand and better serve our existing markets, new storage facilities were constructed which boosted total capacity more than six fold, and as a result, in conjunction with work force expansion, total administrative expense for the quarter ended September 30, 2009 increased to RMB12.7 million (US$1.9 million) compared to RMB5.1 million for the same period last year.
Operating Income
Operating income for the quarter ended September 30, 2009 was RMB24.1 million (US$3.5 million) compared to RMB24.8 million for the same period last year because the increase in net revenue was offset by the increase in administrative expense. Operating margin for the quarter ended September 30, 2009 was 37.8%.
Earnings Before Interest, Taxes, Depreciation and Amortization ("non-GAAP EBITDA")
Non-GAAP EBITDA for the quarter ended September 30, 2009 was RMB28.9 million (US$4.2 million), a slight increase of 8.9% year-over-year, translating into a non-GAAP EBITDA margin of 45.3%.
Net Income Attributable To China Cord Blood Corporation Shareholders
Net income attributable to shareholders for the quarter ended September 30, 2009 increased to RMB17.6 million (US$2.6 million), up from RMB5.8 million for the same period of 2008. Net income attributable to shareholders margin for the quarter ended September 30, 2009 was 27.6%, up from 11.8%. Basic earnings per share and fully diluted earnings per share attributable to ordinary shares for the quarter ended September 30, 2009 were RMB0.29 (US$0.04) and RMB0.27 (US$0.04), respectively.
Non-GAAP basic earnings attributable to shareholders for the September 30, 2009 quarter amounted to RMB0.29 (US$0.04), up from RMB0.10 for the same period last year.
Other Selected Data
As of September 30, 2009, the Company had total cash and cash equivalents of RMB247.8 million (US$36.3 million) as compared to RMB161.4 million as of March 31, 2009. As of September 30, 2009, the Company had a balance on short-term loans of RMB45.0 million (US$6.6 million).
As of September 30, 2009, non-current inventories were RMB26.9 million (US$3.9 million) compared to RMB26.1 million as of March 31, 2009. Thirteen units of donated cord blood stem cells were used for treatment during the quarter ended September 30, 2009.
For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8262 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Wednesday, September 30, 2009. No presentation is made that the RMB amounts could have been or could be converted into U.S. dollars at that rate or at any other certain rate on September 30, 2009 or at any other dates.
Financial Results for the Six Months Ended September 30, 2009
Revenue
Fiscal year 2010 first half net revenue amounted to RMB121.8 million (US$17.8 million), an increase of 48.7% year-over-year from RMB81.9 million. During this period, 21,752 new subscribers signed up for our services, an increase of 47.1% year-over-year from 14,789.
Gross Profit
Backed by the increase in subscriber numbers, gross profit for the six months ended September 30, 2009 amounted to RMB87.9 million (US$12.9 million), an increase of 47.2% from RMB59.8 million for the same period last year. Fiscal year 2010 first half gross margin was 72.2%, similar to 72.9% for the same period last year.
Operating Income
Fiscal year 2010 first half operating income increased 39.9% year-over-year to RMB47.2 million (US$6.9 million). Operating margin decreased by 2.5 percentage points to 38.7% which was largely attributable to the increase in overhead following the storage capacity and work force expansion.
Net Income Attributable to Shareholders
Net income attributable to China Cord Blood Corporation shareholders for the six months ended September 30, 2009 was RMB13.0 million (US$1.9 million), compared to a loss of RMB12.3 million last year. During the six months ended September 30, 2008, total write-off and impairment loss amounted to RMB37.3 million and RMB21.6 million (US$3.2 million) for the six months ended September 30, 2009.
Earnings Per Share
Fiscal year 2010 first half basic earnings per share and fully diluted earnings per share attributable to ordinary shares were RMB0.12 (US$0.02) and RMB0.11 (US$0.02), respectively.
Earnings Before Interest, Taxes, Depreciation and Amortization ("non-GAAP EBITDA")
For the six months ended September 30, 2009, the Company recorded non-GAAP EBITDA of RMB56.7 million (US$8.3 million), up from RMB37.1 million same period last year.
Non-GAAP Earnings Per Share
Non-GAAP basic earnings attributable to shareholders for the six months ended September 30, 2009 amounted to RMB0.57 (US$0.08) comparing to a loss of RMB0.21 same period last year.
Business Outlook for Fiscal Year 2010
The Company expects the total number of new subscribers for fiscal year 2010 will increase by approximately 30% year-over-year or no less than 45,000 new subscribers, which transpires into no less than 30% increase in total net revenue. Accumulated total number of subscribers will be at least 129,000 by March 31, 2010. With intention in geographic expansion, the Company continues to pursue active discussions with several existing licensees and license applicants in certain other regions for potential acquisitions.
The Company's practice is to provide guidance on a full year basis only. Such expectations reflect the Company's current and preliminary views, which is subject to change.
Conference Call
The Company will hold a conference call at 8:00 am EST on Friday, December 11, 2009 to discuss the Company's second quarter financial performance and provide a brief overview of the Company's recent development followed by a question and answer session. Listeners may access the call by dialing 1-866-519-7010 for U.S. domestic callers, +61-2-96960911 for international callers, or 800-90-1036 and 800-93-0392 for Hong Kong callers, access code: 44327945. A replay of the call will be accessible through December 18, 2009 by dialing +852-2888-1115, access code: 44327945.
About China Cord Blood Corporation
China Cord Blood Corporation is the first and the largest cord blood banking operator in China in terms of geographical coverage and is the only cord blood bank operator with more than one license (i.e., Beijing and Guangdong). Under the current PRC government regulations, only one licensed cord blood bank operator is permitted to operate in each licensed region and only six licenses have been issued as of today. China Cord Blood Corporation provides cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services. For more information, please visit our website at http://www.chinacordbloodcorp.com .
About Non-GAAP Financial Measures
On June 30, 2009, holders of 100% of China Cord Blood Services Corporation's ordinary shares and holders of 76% of China Cord Blood Services Corporation redeemable ordinary shares exchanged their shares for a total of 54,345,104 shares of the Company ordinary shares. Further in August 2009, holders of the remaining 24% of redeemable shares of China Cord Blood Services Corporation exchanged such shares for 3,506,136 shares of the Company's ordinary shares. The Non-GAAP basic income/(loss) per share attributable to China Cord Blood Corporation shareholders for the three months and six months ended September 30, 2009 give effect to the abovementioned share exchange transaction as if they had been completed at the beginning of period. Pro forma adjustments are made to add back the write-off of deferred reverse recapitalization costs and income attributable to redeemable noncontrolling interests as if the above share exchanges with ordinary shareholders of China Cord Blood Services Corporation had been completed at the beginning of period and all reverse recapitalization costs had been written off prior to the completion of the share exchanges with ordinary shareholders of China Cord Blood Services Corporation.
Non-GAAP EBITDA represents operating income excluding acquired intangible assets amortization expense and depreciation expense. We have presented EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. Management uses EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. Other companies in our industry may calculate EBITDA differently than we do, basing the determination on net income before net interest expense, income tax expense (benefit), depreciation and amortization. EBITDA is not a measure of performance under generally accepted accounting principles (GAAP) and should not be considered as a substitute for net income prepared in accordance with GAAP.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The non-GAAP measures described by the Company are reconciled to the corresponding GAAP measure in the exhibits below titled "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliations of non-GAAP EPS to the nearest comparable GAAP measures".
The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to its historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to the supplemental information used by management in its financial and operational decision-making.
Safe Harbor Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, performance and results of operations, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For more information, please contact:
China Cord Blood Corporation
Ms. Joeling Law
Phone: +852-3605-8180
Email: ir@chinacordbloodcorp.com
Integrated Corporate Relations, Inc.
In the United States:
Ashley M. Ammon or Christine Duan
Phone: +1-646-277-1200
In China:
Wei-Jung Yang:
Phone: +86-10-6599-7968
Exhibit 1
CHINA CORD BLOOD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30 and March 31, 2009
September 30, March 31,
2009 2009
US$ RMB RMB
(in thousands except redemption value
and number of shares)
ASSETS
Current assets
Cash and cash equivalents 36,303 247,813 161,406
Accounts receivable, less allowance
for doubtful accounts (September 30,
2009: RMB6,764; March 31, 2009:
RMB 6,170) 9,416 64,274 49,763
Inventories 763 5,211 6,501
Prepaid expenses and other receivables 1,171 7,990 7,978
Deferred tax assets 279 1,908 1,846
Total current assets 47,932 327,196 227,494
Property, plant and equipment, net 36,855 251,574 236,740
Non-current prepayments and deposits 3,013 20,569 27,184
Non-current accounts receivable, less
allowance for doubtful accounts
(September 30, 2009: RMB3,793;
March 31, 2009: RMB2,223) 20,823 142,144 91,761
Inventories 3,940 26,894 26,069
Intangible asset, net 3,923 26,783 27,268
Available-for-sale equity securities 6,130 41,843 26,242
Deferred reverse recapitalization costs -- -- 33,633
Deferred offering costs 129 878 --
Deferred tax assets 64 436 --
Total assets 122,809 838,317 696,391
LIABILITIES
Current liabilities
Bank loan 6,592 45,000 --
Accounts payable 979 6,681 5,128
Accrued expenses and other payables 2,982 20,353 19,269
Deferred revenue 4,238 28,927 18,351
Promissory note 514 3,510 --
Amounts due to related parties 516 3,523 --
Income tax payable 579 3,953 4,321
Total current liabilities 16,400 111,947 47,069
Deferred revenue 11,525 78,676 74,231
Other non-current liabilities 2,212 15,100 13,551
Deferred tax liabilities 476 3,249 4,017
Total liabilities 30,613 208,972 138,868
Commitments and contingencies
Redeemable ordinary shares of China
Cord Blood Services Corporation
US$0.0001 par value, 14,614,140
shares issued and outstanding as of
March 31, 2009 (redemption value of
US$51,088,745 as of March 31, 2009) -- -- 386,577
EQUITY
China Cord Blood Corporation
shareholders' equity Ordinary
shares US$0.0001 par value,
250,000,000 shares authorized,
43,237,100 shares and 62,792,642
shares issued and outstanding as
of March 31, 2009 and September
30, 2009, respectively 6 43 34
Additional paid-in capital 84,038 573,660 140,745
Accumulated other comprehensive loss (517) (3,531) (19,319)
Retained earnings 7,495 51,160 44,082
Total China Cord Blood Corporation
shareholders' equity 91,022 621,332 165,542
Noncontrolling interests 1,174 8,013 5,404
Total equity 92,196 629,345 170,946
Total liabilities, redeemable
ordinary shares and equity 122,809 838,317 696,391
Exhibit 2
CHINA CORD BLOOD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended September 30, 2009 and 2008
Three months ended Six months ended
September 30, September 30,
2009 2008 2009 2008
US$ RMB RMB US$ RMB RMB
(in thousands except per share)
Revenues 9,361 63,897 48,988 17,847 121,826 81,935
Direct costs (2,583) (17,632) (11,667) (4,965) (33,888) (22,175)
Gross profit 6,778 46,265 37,321 12,882 87,938 59,760
Operating expenses
Sales and marketing (1,387) (9,470) (7,382) (2,419) (16,512) (15,047)
General and
administrative (1,854) (12,651) (5,107) (3,549) (24,227) (10,978)
Total operating
Expenses (3,241) (22,121) (12,489) (5,968) (40,739) (26,025)
Operating income 3,537 24,144 24,832 6,914 47,199 33,735
Other income/
(expense), net
Interest income 252 1,723 938 404 2,755 1,911
Interest expense (96) (657) -- (164) (1,117) --
Exchange gain/(loss) 66 451 (88) 83 563 (81)
Write-off of deferred
offering costs -- -- (9,688) -- -- (9,688)
Write-off of
deferred reverse
capitalization costs -- -- -- (3,159) (21,566) --
Impairment loss on
available-for-sale
equity securities -- -- (4,944) -- -- (27,598)
Others 13 83 1,738 55 377 (1,146)
Total other income/
(expense), net 235 1,600 (12,044) (2,781) (18,988) (36,602)
Income/(loss) before
income tax 3,772 25,744 12,788 4,133 28,211 (2,867)
Income tax expense (933) (6,367) (5,840) (1,779) (12,141) (7,798)
Net income/(loss) 2,839 19,377 6,948 2,354 16,070 (10,665)
Income attributable
to noncontrolling
interests (204) (1,391) (1,169) (392) (2,676) (1,595)
Income attributable
to redeemable
noncontrolling
interests (51) (347) -- (51) (347) --
Net income/(loss)
attributable to
China Cord Blood
Corporation
shareholders 2,584 17,639 5,779 1,911 13,047 (12,260)
Net income/(loss)
per share:
Attributable to
ordinary shares
-Basic 0.04 0.29 (0.01) 0.02 0.12 (0.43)
-Diluted 0.04 0.27 (0.01) 0.02 0.11 (0.43)
Attributable to redeemable
ordinary shares
-Basic N/A N/A 0.42 0.13 0.92 0.44
-Diluted N/A N/A 0.42 0.13 0.92 0.44
Exhibit 3
CHINA CORD BLOOD CORPORATION
Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures
Three Three Three Six Six Six
months months months months months months
Ended Ended Ended Ended Ended Ended
Sep 30, Sep 30, Sep 30, Sep 30, Sep 30, Sep 30,
2009 2009 2008 2009 2009 2008
US$ RMB RMB US$ RMB RMB
('000) ('000) ('000) ('000) ('000) ('000)
GAAP Operating
Income 3,537 24,144 24,832 6,914 47,199 33,735
Depreciation 664 4,537 1,473 1,323 9,027 2,868
Amortization 36 243 243 71 485 485
Earnings before
interest, tax,
depreciation
and amortization
("Non -GAAP
EBITDA") 4,237 28,924 26,548 8,308 56,711 37,088
Exhibit 4
CHINA CORD BLOOD CORPORATION
Reconciliations of non-GAAP EPS to the nearest comparable GAAP measures
3 Months 3 Months 6 Months 6 Months
Ended Sep 09 Ended Sep 08 Ended Sep 09 Ended Sep 08
NUMERATOR ('RMB '000)
GAAP net income/
(loss) attributable
to China Cord Blood
Corporation
Shareholders 17,639 5,779 13,047 (12,260)
Pro forma adjustments:
Income attributable
to redeemable non-
controlling interests 347 -- 347 --
Write-off of deferred
reverse recapital-
ization costs -- -- 21,566 --
Non-GAAP net income
attributable to China
Cord Blood Corporation
shareholders 17,986 5,779 34,960 (12,260)
DENOMINATOR ('000 shares)
Weighted average ordinary
shares issued and
outstanding 61,143 43,237 52,190 43,237
Pro forma adjustments:
Issue of ordinary
shares upon share
exchange with
ordinary shareholders
of China Cord Blood
Services Corporation
in June 2009 -- 12,476 6,238 12,476
Issue of ordinary
shares upon share
exchange with
redeemable ordinary
shareholders of
China Cord Blood
Services Corporation
in August 2009 1,650 3,506 2,578 3,506
Pro forma weighted
average ordinary shares
issued and outstanding 62,793 59,219 61,006 59,219
Non-GAAP basic income/
(loss) per share
attributable to China
Cord Blood Corporation
shareholders (RMB) 0.29 0.10 0.57 (0.21)
Non-GAAP basic income
attributable to
shareholders (US$) 0.04 0.08
I was bidding some 1.01's today, but didn't get any. Oh well.
I really don't know what to expect from Friday's earnings, other than I'd be surprised if the revenue comp wasn't easily beaten. The EPS comp might be tougher depending on the # of shares used. I would also expect Rodman to put out a price target.
I still have some original ones, but I must admit that if I can't find something I like better I'd be happy adding more.