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Consent Solicitation

Press Release​

Dear fellow minority investors, please take time to download and read through these materials. We want to send a collective message that corporate governance is important. 

Download Consent Solicitation Document

 

Download Documents

June 26, 2019

*Disclaimer: All court documents listed are public records.

 

Empty Promises

Albert Chen (CFO) : “…in the context of where does the company should seek additional listing of improving the publicity as well as the liquidity of the company… we do not rule the possibility that we may revisit the topic in the future if it seems beneficial to everyone.

Albert Chen (CFO) : “…we also want to maintain a steady dividend stream as possible as one of the ways to return the capital back to the investor… We will not rule the possibility of continuously returning capital back to investor whether in the form of dividend or share repurchases…”

Albert Chen (CFO): “… the team has been supportive of a stable and predictable dividend policy. And we believe it is the right thing to do for the company and shareholders…”

Albert Chen (CFO) : “…I just want to make sure the investor and the investment community is aware that it is our intention to have a stable dividend policy…”

Albert Chen (CFO) : “…Our positions with respect to capital allocation has always been taken into consideration, shareholders' interest… to a certain extent, the board, including myself, have been remained relatively open in terms of capital allocation positions…”

Albert Chen (CFO) : “…we want to maintain a (dividend) policy that is predictable with certain level of transparency…”

Albert Chen (CFO) : “…we have no intention of ruling out share repurchases for good... we hope shareholders will prefer a dividend payment…”

Albert Chen (CFO): “…we have an excessive amount of capital on hand, and we will have to find a way to reward our shareholders either through means of share repurchase or dividend, that is something that's constantly on our mind…”

 
Jul 11

CO Minority Shareholder Rights

4 comments

Edited: Jul 29

Minority shareholders are still shareholders. Our rights need to be respected.

Thank you for your work to defend our rights. Just a remark in your valuation work, you do not mention the 24% stake in Qilu. The value of this stake is at least $500m based on the transaction between former Qilu stakeholders and Nanjing, and based on the current financial metrics of Qilu (c. $90m net income in calendar 2018 + I guess a lot of cash on the balance sheet). Thanks

Jul 17

The company looks extremely cheap and the stake from Qilu seems to worth a lot. Will there be another bidder ?

The issue for another bidder is that the Sanpower Fund is not a seller or a seller only to Nanjing... Sanpower knows perfectly the value of the company.

 

What the company/board should do is quite simple: reject the Cordlife offer + implement a sustainable distribution policy to its shareholders through repurchase of shares and dividend. Then the stock price will climb to at least 15$/20$ in a short period of time...We all know why the stock price is there..

 

Another alternative for the company is to implement a dual listing on the new tech board in China through CDR issuance (and keeping the US listing). VCanbio Cell (600645 CH) is the perfect comparable as this company owns one of the 7 licenses (a very small one actually). VCanbio has been constantly trading at more than 40x EBITDA over the last 10 years (between 40x EBITDA and 100x EBITDA). If you apply 40x EBITDA to CO you get an EV of $3.4bn and a market cap of $4.3bn i.e. $35 per share. See below for the financial figures.

 

Based on the latest trends for their business, I think that CO will generate in FY 2020 (March 2019-2020) c. $85m EBITDA, $65m net income and $140m FCF in part due to the price increase since April 1st, 2019. The cash balance should be around $900m. And do not forget that the stake in Qilu is worth $500m at least (Qilu is certainly full of cash with $90m annual net income)

So you add: $900m cash + $500m for Qilu and you get $1.4bn cash and cash equivalents.

Then you apply 20x net income and you get $1.3bn.

So total valuation: $1.4bn + $1.3bn = $2.7bn i.e. 22$ per share

And this business is a recurring business with a very strong visibility

Also if they do some buybacks at the current price, it's going to be extremely relutive for other shareholders...

 

So in conclusion, the best solution for the minority shareholders AND the majority shareholder is to implement a dual listing on the new tech board through CDRs. They should repurchase some shares on the US market at the current price and re-issue these shares in the context of an offering of CDRs in China.

 

Aug 26

I have to say that this is a pretty frustrating situation. The stock is falling more today, and now below what I purchased it at 5 years ago. I thought it was a good buy at the time, I was only in college, but they had a nice cash position, steady revenue, and thought I could derive some value from them in the future. Now I'm unsure what to even do here,I bet I have a very small position compared to other investors here but it still bothers me, just wish I sold it when it was @ $12, hindsight right. Now with Q1 earnings coming, do we really expect to learn anything further? I doubt it, but I guess I'm being pessimistic here. Good luck with anyone asking questions on the call though, I hope we hear something different than usual.

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