CORDLIFE: 1Q20 profit jumps 70% on lower marketing expenses, etc

Measures to curb the Covid-19 outbreak led to Cordlife Group not being able to organise many advertising and promotion activities.

(S$'000)	1Q 2020	1Q 2019	Change
Revenue	14,473	14,552	(0.5)%
Gross Profit	9,149	9,106	0.5%
Profit before tax	1,811	1,341	35.0%
Income tax	(321)	(464)	(30.8)%
Net Profit	1,490	877	69.9%

Gross profit margin	63.2%	62.6%	0.6pp
Net profit margin	10.3%	6.1%	4.2pp

In turn, that led to lower marketing expenses which helped boost 1Q2020 net profit by 69.9% y-o-y to S$1.5 million.

Operating the largest network of cord blood banks in Asia with full stem cell banking facilities in six markets -- Singapore, Hong Kong, Indonesia, India, Malaysia and the Philippines -- Cordlife turned to online marketing through webinars and digital presentations.

Thus, its revenue stayed stable at S$14.5 million, dipping 0.5 % y-o-y. Gross profit inched up 0.5% to S$9.1 million.

Going online

“Our operations in most of the markets remain stable this quarter despite the tough operating environment. The implementation of social distancing measures and closed borders have limited our marketing activities. Nevertheless, our staff were able to use alternative online means to reach out to our clients."

-- Tan Poh Lan (photo),
CEO, Cordlife

Pre-Covid days, Cordlife would organise antenatal classes in hospitals where specialists like paediatricians and nutritionists shared information with pregnant women and aspiring mothers.

Now, it's being done through webinars which also serve as marketing platforms for Cordlife's services, said CEO Tan Poh Lan during an investor briefing on its 1Q2020 results.

Going online enables a wider reach across a few cities in any one country, for example, and leads to cost-savings from staff travel expenses and hosting of marketing events.

Ms Tan noted that as Cordlife's clientele is the midde-class and above, there is an intrinsic resilience in its business amid the economic upheaval caused by Covid-19.

Stock price	33.5 c
52-week range	27 - 63 c
PE (ttm)	13.4
Market cap	S$85 m
Shares outstanding	253.7 m
Dividend yield (FY19)	3%
1-year return	-27%

Of Cordlife's total revenue figure in 1Q2020, about 95% came from bio-banking of cord blood, cord tissue and cord lining.

Within bio-banking, about 80% came from upfront processing fees while the rest, from ongoing storage fees of biological samples.

The Indonesia and Philippines markets saw growth in revenue, according to Cordlife.

ChooBoonYong819

CFO Choo Boon Yong.
NextInsight file photoWhile diagnostics services segment accounted for about 5% of total revenue, it is seeing its growth trajectory extended from last year.

Net cash flow from operations remained strong at S$3.5 million, up from S$2.7 million a year ago.

The Group’s net cash has risen to S$58.0 million as at 31 March 2020, providing it the resources to make acquisitions when appropriate.

For the 1Q2020 Powerpoint presentation, click here.

CORDLIFE: 1Q20 profit jumps 70% on lower marketing expenses, etc

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