Cordlife Group

[boonsong]

If anyone would like to discuss about the current Cordlife situation, please drop me a message.
I am a recent shareholder and is tabling a list of question to ask management before AGM

If you don't mind me asking, may I know what made you want to become a shareholder recently ? 

imho, the situation seems pretty complicated. Disclaimer of opinion also reminds me of my distressing experience in Best World. In any case, perhaps the following articles can help you generate some AGM questions. 

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The Cordlife saga – 3 questions affected families should ask | Singapore
https://www.withersworldwide.com/en-gb/i...-singapore

https://www.straitstimes.com/singapore/a...lood-units

https://www.businesstimes.com.sg/compani...financials

I believe the share price is appropriately priced with enough margin of safety build in; even in the event that there is a compensation the size of its market cap, the stock is still worth quite a bit. I could share with you via zoom if you wish because I want to check if there are loopholes in my understanding, and the privacy of zoom is as such that I wouldn't get into trouble with some of the things I will say.

[weijian]

hi boonsong,

You can refer to the posting guidelines as below. My personal observation is that as long as VBs adhere to these guidelines, one should relatively stay out of trouble.
https://www.valuebuddies.com/thread-1844...#pid167932

That said, I do understand where you are coming from, as VB had its fair share of overjealous insiders and minorities. There are some writing skill sets involved and I would see it as a challenge to make such postings work out just fine, rather than avoiding it totally. This involves coming up with open-ended statements, satire or even sarcasm. Prof Mak has perfected his skills through his CG writings and had been great examples for me to learn.

Moderator

[weijian]

I believe the share price is appropriately priced with enough margin of safety build in; even in the event that there is a compensation the size of its market cap, the stock is still worth quite a bit. I could share with you via zoom if you wish because I want to check if there are loopholes in my understanding, and the privacy of zoom is as such that I wouldn't get into trouble with some of the things I will say.

hi boonseng,

My personal suspect is that the compensation is probably going to be much smaller than the size of the market cap. So there will be a lot of equity value left and so just from undervaluation perspective, there will be a margin of safety. This is also further confirmed by the fact that 1 of the major shareholder has indicated that they are preparing a bid. The other majority shareholder that controls the executive, has not made any major moves yet. But if they decide to respond, when 2 elephants tussle, the rats below don't get trampled but will probably benefit as the elephants try to woo them to their side.

BUT looking at Cordlife via the lenses of undervaluation, may be setting up one with a lot of headache though. Return of Equity is highly uncertain but Return of Brain Damage is a guarantee.

Cordlife's business happens only because customers exhibited faith in 2 areas - (1) Able to safely store their "hopes". (2) Still around in the future.

So far, things are not looking good in these 2 areas and suggest that customers' attitude may be permanently altered, especially in Spore. And Spore is the most affluent country in the geographies it operates, and hence its biggest TAM.

There could be a scenario where only the controlling shareholder may be able to extract the residual value - via selling bits and pieces of existing businesses, or creating new "synergies". A minority can't be guaranteed to be part of the consideration.

[boonsong]

I believe the share price is appropriately priced with enough margin of safety build in; even in the event that there is a compensation the size of its market cap, the stock is still worth quite a bit. I could share with you via zoom if you wish because I want to check if there are loopholes in my understanding, and the privacy of zoom is as such that I wouldn't get into trouble with some of the things I will say.

hi boonseng,

My personal suspect is that the compensation is probably going to be much smaller than the size of the market cap. So there will be a lot of equity value left and so just from undervaluation perspective, there will be a margin of safety. This is also further confirmed by the fact that 1 of the major shareholder has indicated that they are preparing a bid. The other majority shareholder that controls the executive, has not made any major moves yet. But if they decide to respond, when 2 elephants tussle, the rats below don't get trampled but will probably benefit as the elephants try to woo them to their side.

BUT looking at Cordlife via the lenses of undervaluation, may be setting up one with a lot of headache though. Return of Equity is highly uncertain but Return of Brain Damage is a guarantee.

Cordlife's business happens only because customers exhibited faith in 2 areas - (1) Able to safely store their "hopes". (2) Still around in the future.

So far, things are not looking good in these 2 areas and suggest that customers' attitude may be permanently altered, especially in Spore. And Spore is the most affluent country in the geographies it operates, and hence its biggest TAM.

There could be a scenario where only the controlling shareholder may be able to extract the residual value - via selling bits and pieces of existing businesses, or creating new "synergies". A minority can't be guaranteed to be part of the consideration.

The current executive group has likely zero goodwill left with the customers and imo should be flushed. 

Whether the other side is a better choice, is anyone's guess. I have my own theories why they are mulling over an offer and not doing it outright. It could be outright posturing, unsure if they could garner enough votes (why not just wait until the AGM to see how it goes before bidding), etc.

After the question of who holds executive control is over, they would need to win back the trust, cool down whoever is sitting on the fences, etc

They will definitely need an authority of trust to preside over. It would have to be someone who was / is a public figure.

***

ROE should not be a consideration for this company. It was sliding in returns and ratios alike for years since 2016. This problem and its recovery is the only reason why someone should invest with it, since there is a chance the current executive would stay.

[weijian]

The current executive group has likely zero goodwill left with the customers and imo should be flushed. 

Whether the other side is a better choice, is anyone's guess. I have my own theories why they are mulling over an offer and not doing it outright. It could be outright posturing, unsure if they could garner enough votes (why not just wait until the AGM to see how it goes before bidding), etc.

After the question of who holds executive control is over, they would need to win back the trust, cool down whoever is sitting on the fences, etc

They will definitely need an authority of trust to preside over. It would have to be someone who was / is a public figure.

***

ROE should not be a consideration for this company. It was sliding in returns and ratios alike for years since 2016. This problem and its recovery is the only reason why someone should invest with it, since there is a chance the current executive would stay.

hi boonseng,

I wonder if customers can recall the name of the ex CEO (or anyone in the BOD) or the Cordlife name? If people cannot recall the former, the former can keep changing but nothing is going to change. Of course, in future, to dis-associate itself with the demons of the past, the Cordlife name can be changed.

20 years ago, the NKF scandal aka TT Durai's 600k "peanuts" pay and golden tap was damaging to public trust because Durai was almost synonymous with NKF back then. After TT Durai was removed, Gerald Ee came in as interim chairman. So your solution is spot on - a public figure with authority/trust needs to step in. Whether anyone with that stature will, is another ting. For NKF case, Gerald Ee accepted the role on request of the ex-Health Minister Khaw Boon Wan.

The ex-CEO resigned before the scandal went public. There was ample time to look outside for a "good name" candidate. Instead, a related party was appointed. This candidate is probably capable in his own right but could this have indicated that there is a lack of external candidates with "authority/trust" willing to jump the lot?

[boonsong]

The current executive group has likely zero goodwill left with the customers and imo should be flushed. 

Whether the other side is a better choice, is anyone's guess. I have my own theories why they are mulling over an offer and not doing it outright. It could be outright posturing, unsure if they could garner enough votes (why not just wait until the AGM to see how it goes before bidding), etc.

After the question of who holds executive control is over, they would need to win back the trust, cool down whoever is sitting on the fences, etc

They will definitely need an authority of trust to preside over. It would have to be someone who was / is a public figure.

***

ROE should not be a consideration for this company. It was sliding in returns and ratios alike for years since 2016. This problem and its recovery is the only reason why someone should invest with it, since there is a chance the current executive would stay.

hi boonseng,

I wonder if customers can recall the name of the ex CEO (or anyone in the BOD) or the Cordlife name? If people cannot recall the former, the former can keep changing but nothing is going to change. Of course, in future, to dis-associate itself with the demons of the past, the Cordlife name can be changed.

20 years ago, the NKF scandal aka TT Durai's 600k "peanuts" pay and golden tap was damaging to public trust because Durai was almost synonymous with NKF back then. After TT Durai was removed, Gerald Ee came in as interim chairman. So your solution is spot on - a public figure with authority/trust needs to step in. Whether anyone with that stature will, is another ting. For NKF case, Gerald Ee accepted the role on request of the ex-Health Minister Khaw Boon Wan.

The ex-CEO resigned before the scandal went public. There was ample time to look outside for a "good name" candidate. Instead, a related party was appointed. This candidate is probably capable in his own right but could this have indicated that there is a lack of external candidates with "authority/trust" willing to jump the lot?

there is a lengthy circular available for reading if anyone is interested. The appendix contain explanations from the Board of Directors in response for the resolutions to remove some of them.

https://links.sgx.com/FileOpen/CGL%20-%2...eID=800986

Page 42/64 is the account which lead to the appointment of the current CEO

[specuvestor]

http://www.businesstimes.com.sg/premium/...t-20140924

PUBLISHED SEPTEMBER 24, 2014
Cordlife's big China gambit
Stake in China Cord Blood Corporation is for the long haul: CEO Jeremy Yee
BYJOYCE HOOI
joyceh@sph.com.sg  @JoyceHooiBT

Mr Yee: 'I think we're doing the right thing. I don't need a consensus from analysts to run a business.' - ST FILE PHOTO
WHENEVER Cordlife Group's Jeremy Yee looks at his firm's stake in China Cord Blood Corporation (CCBC), the only thing that must irritate him is how Cordlife does not own more of it.
Now, what must irritate Cordlife's CEO even more is how some on the Street - or "the people in Raffles Place" as he calls them - have reacted to his attempt to boost the company's stake in CCBC.
Last month, Cordlife and Magnum Opus International (Magnum) - a vehicle controlled by CCBC's chairman Kam Yuen - agreed to go halves on CCBC senior convertible notes costing about US$88.09 million. These notes carry the principal amount of US$50 million and a coupon rate of 7 per cent.
If Cordlife were to fully convert its half of the notes, it would increase its CCBC stake from 10.02 per cent to almost 18 per cent.

As a consumer, I would not want to store my child's cord blood with listed cord blood bank run by PRCs.

Prefer Stemcord. At least they have contingent planning by storing 2 bags at 2 separate locations.

But most people dont bother with the details. They will be sold to by commissioned salespeople at baby fairs.

In my opinion this was the beginning of the end.

Culture change doesn't happen overnight but once your ethos change everything changes in decision making. That's why figuring out management (Structure) is important though usually translucent/ opaque

[boonsong]

http://www.businesstimes.com.sg/premium/...t-20140924

PUBLISHED SEPTEMBER 24, 2014
Cordlife's big China gambit
Stake in China Cord Blood Corporation is for the long haul: CEO Jeremy Yee
BYJOYCE HOOI
joyceh@sph.com.sg  @JoyceHooiBT

Mr Yee: 'I think we're doing the right thing. I don't need a consensus from analysts to run a business.' - ST FILE PHOTO
WHENEVER Cordlife Group's Jeremy Yee looks at his firm's stake in China Cord Blood Corporation (CCBC), the only thing that must irritate him is how Cordlife does not own more of it.
Now, what must irritate Cordlife's CEO even more is how some on the Street - or "the people in Raffles Place" as he calls them - have reacted to his attempt to boost the company's stake in CCBC.
Last month, Cordlife and Magnum Opus International (Magnum) - a vehicle controlled by CCBC's chairman Kam Yuen - agreed to go halves on CCBC senior convertible notes costing about US$88.09 million. These notes carry the principal amount of US$50 million and a coupon rate of 7 per cent.
If Cordlife were to fully convert its half of the notes, it would increase its CCBC stake from 10.02 per cent to almost 18 per cent.

wow.. this certainly does not aged well...

[dreamybear]

https://links.sgx.com/FileOpen/CGL%20-%2...eID=800986

I extracted the following from the doc : (bold added)

"8. As stated in the Company’s replies to SGX’s queries (announced on 10 December 2023), “certain members of the management team” were alerted by a Company employee in June 2022 that one of its cryogenic storage tanks had been exposed to irregular temperatures for several days in June 2022 (“Incident”). 

9. The members of the management team that were alerted to the incident were laboratory and management staff dealing with the day-to-day operations of the Company. As it pertained to an operational matter, the management team did not notify the Board of Directors."

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I wonder if there is a company SOP specifying what matters need to be escalated to BOD. For such in-depth operational issues of the company, it isn't likely that OPMI is able to assess this type of risk.

Perhaps there is merit in Annual Reports adapting the Risk section of 10-K filing :
https://www.sec.gov/answers/reada10k.htm
"Item 1A - “Risk Factors” includes information about the most significant risks that apply to the company or to its securities. Companies generally list the risk factors in order of their importance. In practice, this section focuses on the risks themselves, not how the company addresses those risks. Some risks may be true for the entire economy, some may apply only to the company’s industry sector or geographic region, and some may be unique to the company."

[weijian]

@boonsong,
Trying to save some money on the CEO search? I hope it is just a front for something else because if it isn't, it reflects much worst on the company as a whole. Penny foolish or pound foolish?

@dreamybear,
Putting in "risk factors" making 1st time reading, is a god-send. But if one has been reading the past 10 years of AR showing the same stuff, it becomes quite pointless. Understanding risk and avoiding it altogether are different things. We try to focus on the later to minimize risk.