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Cordlife Group Ltd Bloomberg: CLGL SP | Reuters: CORD.SI

DBS Group Research . Equity

7 Dec 2012

NOT RATED S$0.535 STI : 3,078.20

Stable recurring income

Return *: 1 Risk: Moderate Potential Target * : 12-Month S$ 0.65 (21% upside)

•

Larger of only two private cord blood banks in Singapore; among the top 3 in Hong Kong

Analyst LING Lee Keng +65 6398 7970 [email protected]

•

Increasing penetration rate and awareness of cord blood banking to drive growth

Andy SIM CFA +65 6398 7969 [email protected]

•

Stable recurring income; potential acquisitions in Indonesia, India and Philippines

•

Fair value of S$0.65 offers 21% potential upside

%

Price Relative S$

The Business

R e la t iv e In d e x

0 .8

222

0 .8

202

0 .7

Market leader in cord blood banking. Cordlife provides cord blood banking services in Singapore and Hong Kong. Its services include the collection, processing, testing, cryopreservation and storage of umbilical cord blood at birth. It also provides umbilical cord tissue banking services in Hong Kong.

182

0 .7

162

0 .6 142

0 .6

122

0 .5

102

0 .5 0 .4 M a r -1 2

82 J u n -1 2

C o r d lif e G r o u p L t d ( L H S )

S e p -1 2

R e la t iv e S T I IN D E X ( R H S )

Forecasts and Valuation FY Jun (S$ m)

Turnover EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (S cts) EPS Pre Ex. (S cts) EPS Gth (%) EPS Gth Pre Ex (%) Diluted EPS (S cts) Net DPS (S cts) BV Per Share (S cts) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Consensus EPS (S cts): Other Broker Recs:

2012A

2013F

2014F

2015F

29 7 8 7 7 3.0 3.0 (47) (47) 3.0 2.0 30.6 18.0 18.0 20.6 16.1 3.7 1.7 CASH 12.4

32 10 10 9 9 3.8 3.8 28 28 3.8 1.9 32.5 14.0 14.0 18.0 11.1 3.6 1.6 CASH 12.1

35 11 12 10 10 4.3 4.3 12 12 4.3 2.1 34.6 12.5 12.5 16.6 9.8 4.0 1.5 CASH 12.7

41 13 13 11 11 4.9 4.9 15 15 4.9 2.5 37.1 10.9 10.9 13.6 8.3 4.6 1.4 CASH 13.7

4.8 B: 1

4.3 S: 0

4.9 H: 1

ICB Industry : Consumer Services ICB Sector: General Retailers Principal Business: Provides cord blood banking services in Singapore and Hong Kong. Its services include the collection, processing, testing, cryopreservation and storage of umbilical cord blood at birth.

Increasing penetration rate and awareness of cord blood banking to drive growth. According to the group’s IPO prospectus, penetration level in Singapore is expected to rise to 38% by 2015, from 24% in 2010. In Hong Kong and China, penetration rate is expected to deepen to 20.6% and 5% in 2015, from 11.5% and 2% respectively in 2000. Stable recurring income, acquisitions to boost revenue. The bulk of its revenue is recurring, as >50% of its customers are on an annual payment scheme. Cordlife’s target acquisition markets include Indonesia, India and the Philippines.

The Stock Fair value S$0.65. The stock current trades at 14.0x FY13F PE. We believe a target PE of 16x based on a slight (<10%) discount to blended forward PE of its peers is reasonable, given its shorter trading history. This translates to a fair value of S$0.65, which offers potential upside of 20% from current share price. Key risks include reputational risk. Any problem with the quality of its cord blood banking services will be extremely detrimental to the Group. At A Glance Issued Capital (m shrs) Mkt. Cap (S$m/US$m) Major Shareholders China Stem Cells East Co Ltd (%) Lau Wai Chi Stellan (%) Coop International Pte Ltd (%) Free Float (%) Avg. Daily Vol.(‘000)

232 124 / 102 10.5 9.4 8.8 64.1 2,629

Source of all data: Company, DBS Vickers, Bloomberg

*This Equity Explorer report represents a preliminary assessment of the subject company, and does not represent initiation into DBSV’s coverage universe. As such DBSV does not commit to regular updates on an ongoing basis. The rating system is distinct from stocks in our regular coverage universe and is explained further on the back page of this report. www.dbsvickers.com

Refer to important disclosures at the end of this report ed: JS / sa: YM

Equity Explorer Cordlife Group Ltd REVENUE DRIVERS Dominant market leader in Singapore. Incorporated in May 2001 and listed on SGX in Mar 2012, Cordlife is among the first private cord blood banks in Asia and is also accredited by AABB (formerly known as the American Association of Blood Banks) since 2005. In Singapore, there are currently only two players, with Cordlife having a larger market share of about 62%.

Chart 1: Revenue vs Net Margins S$m

%

30

35

25

30 25

20

20 15

Capitalising on the growing affluence in China. In Hong Kong, Cordlife is one of the three leading players with a market share of

15 10

around 28%. It also has a presence in China, via a 10% stake in

10

5

5

NYSE-listed China Cord Blood Corp, China’s largest cord blood 0

banking operator with presence in Beijing, Guangdong and

0 2009

2010

2011

2012

Zhejiang. Revenue

COST STRUCTURE Processing fee forms bulk of cost. About 88% of total cost is processing fees, which is incurred at the start. The balance is storage

Table 1 : Pricing structures in Singapore Co mp a n y Cordlife

fees, which is expected to decrease over time as economies of scale kick in. Stable recurring income. Out of approximately 40,000 customers,

Net margins

StemCord

Co l l e c ti o n Fe e o r O n e Ti me Fe e S$1,950 S$6,200 S$4,200 for the 1st 10 yrs S$1,580

An n u a l Sto ra g e Fe e S$250 0 S$250 for the next 11 yrs S$275

about 24,000 of them are on annual payment scheme, paying about S$250 or HK$1500 every year till the child’s maturity age at either 18 or 21, implying recurring income of about S$5-6m per year, more than half of FY12 net profit. Furthermore, Cordlife is also

Sto ra g e Pe ri o d 21 years 21 years 21 years 5 yrs or more; usually 21 yrs

Chart 2: Storage Volume Growth and Penetration Rate In Singapore %

CAGR% 2 007-2010 Private : 16% Public : 14%

Units ('000) 16.0

2 011-2015 9% -17%

allowed to increase the annual fee once every 5 years, at not more

40

than 10% each time, which provides further upside potential to

35

revenue. The rest of the customers are either on 10-yr plans or have

30

12.0

already paid upfront. Instances of pre-mature termination due to

25

10.0

non-collection and unsuitability of storage is low, about 5-6% of

20

total customers in the past 3 years.

15

Adequately covered by insurance. We believe Cordlife is adequately

10

covered by insurance against potential losses and claims. There is also a cap of up to a maximum of $4m claim per case in the event

14.0

14.3 9.3

8.0 6.0 4.0

6.0

5

2.0

0

of any mishap or dispute.

1.0

1.5

0.6

2007

2010

2015F

0.0

In Hong Kong

KEY OPERATING ASSETS New headquarters and facility in Yishun. Cordlife’s processing facilities are located in Singapore and Hong Kong and it currently

% 30 25

has about 40,000 cord blood units stored in these two locations. Its

20

new facility in Yishun (ready by 1Q 2013) can store up to 650,000

15

cord blood units. This will enable the Group to expand rapidly. In

10

Hong Kong, Cordlife also provides umbilical cord tissue banking

5

since March 2011. It is currently exploring the possibility of offering

0

this service in Singapore.

CAGR% 2 007-2010 Private : 15% Public : 47%

8 6 5.2

8.4 4

3.4 0.6 2007

2 1.9 2010

1.0 2015F

Incremental Storage Volume in Public Banks Incremental Storage Volume in Private Banks Penetration Rate (Private) (%) Market Share of Public Banks (%)

Source: Company, DBS Vickers

Page 2

Units ('000) 10

2 011-2015 10% -12%

0

Equity Explorer Cordlife Group Ltd

GROWTH PROSPECTS Low penetration rate implies more headroom for expansion. While

Table 2: Key Competitors

the falling fertility rate is a concern, Singapore has been experiencing constant birth rates of around 38,000 new births a year. According to the Group’s IPO prospectus, the penetration level of Singapore’s private cord blood banking is expected to rise to 38% by 2015, from 24% in 2010. In Hong Kong, the penetration rate is expected to deepen to 20.6% in 2015, from 11.5% in 2010. Penetration rate in China, the world’s fastest-growing population of middle-class consumers, is expected to grow to 5% in 2015 from 2% in 2010 in provinces with cord blood banking operations. Increasing awareness and acceptance. With higher educational attainment, the younger population has greater awareness and acceptance of cord blood banking as a form of biological insurance. The successful transplants so far and active participation in cord blood banking from hospitals, both private and public, are also contributing factors to a more favourable attitude towards cord

Co mp a n y I n Si n g a p o re Cordlife StemCord Singapore Cord Blood Bank (SCBB) I n Ho n g Ko n g Healthbaby Cordlife Cryolife

Sto ra g e M a rke t Ca p a c i ty s h a re (u n i ts )

Ye a r o f Es ta b l i s h me n t

Mode l

He a d o ffi c e

2001 2002

Private Private

Singapore Singapore

c.62% c.38%

60,000 c. 40,000

2005

Public

Singapore

100%

n.a.

2005 2005 1998

Private Private Private

Taiwan Singapore USA

18,000 50,000 96,000

2004

Private

2009

Private

c.45% c.28% c.23% not UK significant not HK significant

1999

Public

HK

Smart Cells Asia Pacific Stem Cell Red Cross (public bank)

100%

n.a. n.a. 5,000

blood banking. The cumulative number of transplants in Singapore using cord blood has increased significantly, from 17 in 2007 to around 70 in 2010. Moreover, the success rate of such transplants in Singapore has risen from 70% in 2007 to around 80% in 2010. Cord blood storage units to grow 9%. According to the company’s IPO prospectus, the number of private cord blood storage units in Singapore is expected to increase at a CAGR of around 9%, on the back of higher penetration rate and increasing awareness and acceptance of cord blood banking.

Table 3: Key Management Team Position Name Chairman and Non-executive Dr Ho Choon Hou Director Mr Yee Pinh Jeremy Executive Director and Chief Executive Officer Ms Jin Lu Non-executive Director Lead Independent Director Mr Ho Sheng Dr Goh Jin Hian Independent Director Independent Director Mr Ng Tiak Soon

Accretive acquisitions in selected markets. Cordlife’s targeted markets for acquisitions include Indonesia, India and the Philippines. The group has been granted a right of first refusal to acquire Cordlife Ltd’s (CBB) cord blood banking businesses and operating companies in these countries, should CBB decide to sell their businesses. Cordlife was demerged from CBB, which is listed on the Australian Stock Exchange, in Jun 2011.

MANAGEMENT & STRATEGY Experienced management team. The management team brings a variety of expertise, with average seven years of experience in the cord blood banking industry. Mr Jeremy Yee is responsible for identifying and implementing company-wide business growth

Table 4: Management Renumeration Structure Name FY2012 (estimated) p.a. Dr Ho Choon Hou

Below S$250,000

Mr Yee Pinh Jeremy Ms Jin Lu

Between S$250,001 to S$500,000 Below S$250,000

Mr Ho Sheng

Below S$250,000

Dr Goh Jin Hian

Below S$250,000

Mr Ng Tiak Soon

Below S$250,000

Source: Company, DBS Vickers

strategies and organisational structures and is directly responsible for all aspects of the Group’s growth and operating functions. In addition, Mr Yee was the Chief Financial Officer of Cordlife Ltd from 2004 to 2011 where he was directly responsible for the Group’s financial function.

Page 3

Equity Explorer Cordlife Group Ltd

Key Assumptions FY Jun

2012A

2013F

2014F

2015F

Revenue Growth North Asia South Asia

10% 13%

10% 10%

12% 12%

15% 14%

Sensitivity Analysis Revenue Growth Revenue +1%

2013 Net Profit +0.9%

Segmental Breakdown FY Jun

2010A

2011A

2012A

2013F

2014F

2015F

8 20

6 19

7 22

8 24

9 27

10 30

Total Pretax profit (S$ m) North Asia South Asia

28

26

29

32

35

41

1 9

2 8

2 6

2 8

3 9

3 10

Total Pretax profit Margins North Asia South Asia

10

10

8

10

12

13

10.3 44.5

24.6 42.9

29.0 25.8

30.0 34.0

30.0 34.0

31.0 34.0

Revenues (S$ m) North Asia South Asia

Revenue growth on the back of improving penetration rate

Hit by ~S$1.1m IPO expenses

Expect margins to stabilise Total

35.0

38.3

26.6

33.0

33.0

33.3

Margins Trend

Income Statement (S$ m) FY Jun

Revenue Cost of Goods Sold Gross Profit Other Opng (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Net Profit before Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%)

Source: Company, DBS Vickers

Page 4

2010A

2011A

2012A

2013F

2014F

2015F

28 (8) 21 (12) 8 0 1 1 0 10 (2) 0 0 8 8 9

26 (7) 18 (11) 7 0 2 1 0 10 (1) 0 0 8 8 9

29 (9) 20 (16) 4 0 2 2 0 8 (1) 0 0 7 7 7

32 (10) 22 (15) 7 0 2 2 0 10 (2) 0 0 9 9 10

35 (11) 25 (17) 8 0 2 2 0 12 (2) 0 0 10 10 11

41 (12) 29 (19) 10 0 2 2 0 13 (2) 0 0 11 11 13

24.7 27.3 18.8 28.7

(8.8) 0.4 (14.3) 0.7

12.1 (29.2) (44.1) (18.3)

10.0 42.8 72.3 28.0

12.0 13.9 18.0 12.0

14.2 17.1 21.5 15.1

72.8 29.9 29.9 28.1 16.6 20.2 0.0

71.1 28.1 33.0 23.0 14.8 14.3 0.0

69.6 14.0 24.1 12.4 9.5 5.5 67.2

70.0 22.0 28.0 12.1 9.6 7.0 50.0

70.1 23.1 28.0 12.7 10.1 7.8 50.0

70.6 24.6 28.2 13.7 11.0 8.9 50.0

33.0%

28.0%

23.0%

18.0%

13.0% 2011A

2012A

Operating Margin %

2013F

2014F

2015F

Net Income Margin %

Include ~S$1.1m IPO expenses

High GP margin maintained over the last few years

Guidance of at least 25% payout ratio for FY13

Equity Explorer Cordlife Group Ltd

Balance Sheet (S$ m) FY Jun

Asset Breakdown (2013) 2010A

2011A

2012A

2013F

2014F

2015F

Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets

2 14 21 8 0 8 5 59

4 15 23 4 0 7 2 55

6 18 38 19 0 9 1 90

6 20 38 20 0 9 1 95

7 22 39 20 1 11 1 101

7 24 41 21 1 12 2 107

ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholder’s Equity Minority Interests Total Cap. & Liab.

1 20 0 5 33 0 59

0 8 1 6 41 0 55

0 8 2 8 71 0 90

0 8 2 8 76 0 95

0 9 2 8 81 0 101

0 10 2 9 86 0 107

(7) 7 107.4 96.1 11.8 0.6 1.0 0.7 CASH (0.2) 171.5

1 3 102.0 118.0 12.7 0.4 1.6 1.3 CASH (0.1) 314.7

2 16 97.5 112.8 14.4 0.4 3.5 3.3 CASH (0.2) 93.6

3 18 104.0 110.7 17.9 0.3 3.7 3.5 CASH 0.0 38.9

3 18 103.1 101.9 17.7 0.4 3.6 3.4 CASH (0.2) 38.9

5 19 102.1 102.7 17.6 0.4 3.6 3.4 CASH (0.2) 38.9

2010A

2011A

2012A

2013F

2014F

2015F

10 0 (2) (1) 0 0 8 (2) 0 (17) 0 3 (16) 0 0 0 9 9 0 1 5.4 4.5

10 1 (1) (2) 1 0 8 (3) 0 0 0 (1) (4) 0 (1) 0 (6) (7) 0 (3) 4.9 3.3

8 1 (2) (2) (1) 2 6 (2) 0 0 0 (18) (20) (5) 2 26 0 23 0 9 2.9 1.6

10 1 (1) (2) (1) 0 7 (1) 0 0 0 0 (1) (4) 0 0 0 (4) 0 1 3.4 2.5

12 1 (2) (2) (1) 0 7 (1) 0 0 0 (2) (3) (5) 0 0 0 (5) 0 0 3.7 2.8

13 1 (2) (2) (1) 0 9 (1) 0 0 0 (2) (3) (6) 0 0 0 (6) 0 1 4.5 3.5

Non-Cash Wkg. Capital Net Cash/(Debt) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%)

Net Fixed Assets 11.4%

Debtors 16.7%

Assocs'/JVs 34.9% Inventory 0.8% Bank, Cash and Liquid Assets 36.2%

Strong cash position; minimal debt

Cash Flow Statement (S$ m) FY Jun

Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Currency Adjustments Chg in Cash Opg CFPS (S cts) Free CFPS (S cts)

Source: Company, DBS Vickers

Capital Expenditure 4 3 3 2 2 1 1 0 2011A

2012A

2013F

2014F

2015F

Capital Expenditure (-)

Expect minimal capex after the completion of new headquarters and facility in Yishun

Page 5

Equity Explorer Cordlife Group Ltd Quarterly / Interim Income Statement (S$ m)

Revenue Trend

FY Jun

3Q2012

4Q2012

1Q2013

7 (2) 5 (4) 1 0 0 0 0 1 0 0 1 1

7 (2) 5 (3) 2 0 0 1 0 2 0 0 2 2

8 (3) 6 (3) 3 0 0 1 0 3 0 0 3 3

N/A N/A N/A N/A

8.2 134.4 157.5 177.9

9.8 44.4 52.6 21.1

69.3 10.0 12.0

70.0 23.7 30.9

69.0 33.0 34.1

Revenue Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%)

9

12% 10%

8

8% 8 6% 7 4% 7

6

2%

0 1 0 2 Q 4

1 1 0 2 Q 1

1 1 0 2 Q 3

1 1 0 2 Q 2

1 1 0 2 Q 4

Revenue

2 1 0 2 Q 1

2 1 0 2 Q 2

2 1 0 2 Q 3

2 1 0 2 Q 4

3 1 0 2 Q 1

0%

Revenue Growth % (QoQ)

Rising revenue and profit trend

Source: Company, DBS Vickers

VALUATIONS Fair value S$0.65. The stock currently trades at 14.0x FY13F PE. The

Chart 3: Historical 12 month forward PE ratio (x) 20

share price has been hovering around the IPO price of S$0.495 in the past few months, after the initial euphoric surge during the first

18

few days of listing. We believe a target PE of 16x, which is at a slight

+2SD

16

discount (<10%) to the average blended forward PE of its peers is reasonable, given its shorter trading history. This would translate to

+1SD

14

a fair value of S$0.65, which offers potential upside of 21%.

Avg

12 -1SD

Risk Assessment: Moderate

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

0.8 0.2 0.4 1.4

-2SD

May-12

40% 20% 40%

8

Apr-12

Wgtd Score

Mar-12

Wgt

Feb-12

Earnings Financials holdings Overall

Risk Rating 1 (Low) - 3 (High) 2 1 1

Jan-12

Category

10

Table 5: Peers’ Comparisons Strong balance sheet with net cash position. As at 30 Sep 12, Cordlife has cash of about S$20m and trade receivables of about

Name

F YE

M ark et Cap ($m)

Price

annual plan. Gearing is low while capital expenditure going forward

Cry olife (USD) Dec-11 China Cord Blood Mar-12 (USD)

165.2 183.7

6.02 2.66

is minimal. This puts the Group in a strong position for further

Cordlife Ltd (USD) J un-12

8.6

0.05

market penetration and expansion at home and overseas.

A v erage

S$25m, which are predominantly receivables from customers on the

Cordlife Group

J un-12

124.5

0.54

Reputation risks. Cordlife’s reputation among customers, the medical community and the media are sexy, extremely important. Any problems with its cord blood banking services are extremely detrimental to the Group. However, Cordlife has already put in place preventive measures and has adequate insurance coverage.

Page 6

Source: DBS Vickers, Bloomberg

PE F Y1 21.3 12.7

PE F Y2

A c t . Net Net Prof it Prof it M argin Div Y ld ($m) (%) (%)

19.1 14.0

7.4 21.0

6.2 34.7

0.4% 0%

(7.6)

-v e

-

6.9

24.1

3.7%

-v e

-v e

17.0

16.5

14.0

12.5

Equity Explorer Cordlife Group Ltd

DBSV Equity Explorer return ratings reflect return expectations based on an assumed earnings profile and valuation parameters: 1

(>20% potential returns over the next 12 months)

2

(0 - 20% potential returns over the next 12 months)

3

(negative potential return over the next 12 months)

The risk assessment is qualitative in nature and is rated as either high, low or moderate risk. (see section on risk assessment) Note that these assessments are based on a preliminary review of factors deemed salient at the time of publication. DBSV does not commit to ongoing coverage and updated assessments of stocks covered under the Equity Explorer product suite. Such updates will only be made upon official initiation of regular coverage of the stock. DBS Vickers Research is available on the following electronic platforms: DBS Vickers (www.dbsvresearch.com); Thomson (www.thomson.com/financial); Factset (www.factset.com); Reuters (www.rbr.reuters.com); Capital IQ (www.capitaliq.com) and Bloomberg (DBSR GO). For access, please contact your DBSV salesperson. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers Research (Singapore) Pte Ltd ("DBSVR"), a direct wholly-owned subsidiary of DBS Vickers Securities (Singapore) Pte Ltd ("DBSVS") and an indirect wholly-owned subsidiary of DBS Vickers Securities Holdings Pte Ltd ("DBSVH"). This report is intended for clients of DBSV Group only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVR. It is being distributed in the United States by DBSV US, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBS Vickers Securities (USA) Inc (“DBSVUSA”) directly and not its affiliate. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVR, DBSVS, and/or DBSVH) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. DBSVR accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. DBSVR, DBSVS, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by DBSVR, DBSVS and/or DBSVH (and/or any persons associated with the aforesaid entities), that: (a) (b)

such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 7 Dec 2012, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities, directorships and trustee positions).

Page 7

Equity Explorer Cordlife Group Ltd

COMPANY-SPECIFIC / REGULATORY DISCLOSURES DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the company mentioned as 1. of 5 Dec 2012. 2.

DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered brokerdealer, may beneficially own a total of 1% or more of any class of common equity securities of the company mentioned as of 7 Dec 2012.

3.

Compensation for investment banking services: i.

DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within the past 12 months, and within the next 3 months receive or intends to seek compensation for investment banking services from the company mentioned.

ii.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia

This report is being distributed in Australia by DBSVR and DBSVS, which are exempted from the requirement to hold an Australian financial services licence under the Corporation Act 2001 [“CA] in respect of financial services provided to the recipients. DBSVR and DBSVS are regulated by the Monetary Authority of Singapore [“MAS”] under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong

This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission.

Singapore

This report is being distributed in Singapore by DBSVR, which holds a Financial Adviser’s licence and is regulated by the MAS. This report may additionally be distributed in Singapore by DBSVS (Company Regn. No. 198600294G), which is an Exempt Financial Adviser as defined under the Financial Advisers Act. Any research report produced by a foreign DBS Vickers entity, analyst or affiliate is distributed in Singapore only to “Institutional Investors”, “Expert Investors” or “Accredited Investors” as defined in the Securities and Futures Act, Chap. 289 of Singapore. Any distribution of research reports published by a foreign-related corporation of DBSVR/DBSVS to “Accredited Investors” is provided pursuant to the approval by MAS of research distribution arrangements under Paragraph 11 of the First Schedule to the FAA.

United Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients.

Dubai/ United Arab Emirates

This report is being distributed in Dubai/United Arab Emirates by DBS Bank Ltd, Dubai (PO Box 506538, 3 Floor, Building 3, Gate Precinct, DIFC, Dubai, United Arab Emirates) and is intended only for clients who meet the DFSA regulatory criteria to be a Professional Client. It should not be relied upon by or distributed to Retail Clients. DBS Bank Ltd, Dubai is regulated by the Dubai Financial Services Authority.

United States

Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations.

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

rd

DBS Vickers Research (Singapore) Pte Ltd – 8 Cross Street, #02-01 PWC Building, Singapore 048424 Tel. 65-6533 9688 Company Regn. No. 198600295W

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