Cordlife Group

[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.