China Cord Blood Corporation

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					                                        China Cord Blood Corporation
                                        January 31, 2010

                                        Group Four: Braden Cielocha, Adam Finzel, David Larson, Bryan Wright

Our Group recommends a HOLD on China Cord Blood
Services for the following reasons:

Investment Thesis

Guangdong has one of the fastest growing economies in
China which should allow for increased numbers of
                                                                 Key Statistics
families with disposable income to be able to spend on
health care services                                             Company: China Cord Blood Corporation
Beijing has the lowest total fertility rate in China at .67      Ticker : CO
births per woman
Although they significant opportunities for growth within        Target Price: $6.12

the regions in which they are currently operating, their         Current Price (1/31/10): $5.98
overall grows is limited because they have no plans for
                                                                 Average Vol (3m): 71,212.7
acquiring new licenses or similar companies already
holding a license                                                Market Cap: 990,489MM

                                                                 Valuation Measures
Company Overview
                                                                 Trailing P/E: 10.26
China Cord Blood Services Corporation (CCBS) is an
umbilical blood storage services company. It allows              Price/Sales: 7.02
families to store their child’s cord blood in the event that     TEV/EBITDA: 9.19
the stem cells from that child’s blood would be necessary
                                                                 TEV/Revenue: 4.27
in for future medical treatment. Families enter into 18
year contracts for their children’s cord blood to be stored      Profitability
with CCBS and pay an upfront fee and a yearly storage
                                                                 Profit Margin: 13%
fee. CCBS also accepts and stores cord blood units
donated by the public and charge a matching fee for              Operating Margin: 44%
patients in need of transplants.
                                                                 EPS: $0 .58

It currently has licenses to operate in Beijing and
Guangdong Province. The PRC currently operates under a
one license per region policy so these two contracts
represent a significant portion of outstanding licenses. Because of the one license per region
policy they are able to operate as a monopoly in the region. CCBS expects to grow its business
through existing market penetration and geographical expansion. Since the licensing process takes
several years and can be very capital intensive to move into a new region which can deter new

entrants to the market leaving CCBS well positioned to gain market share in China.
      Relative Valuation
      We thought that the best
      comparables to use for the CCBS relative         and a birth rate of .5%. ( With
      valuation are the companies that they            these numbers we've found China Cords
      considered to be comparables. They chose         penetration rate to be just .003%. In Cord
      the Chinese companies China Medical              Bloods prospectus, they mentioned how they
      Technologies, Mindray Medical                    want to further market penetration by
      International, and WuXi Pharmatech along         maintaining a dominance in the number of
      with high growth U.S. companies Natus            licenses they have. They want to further
      Medical, Qiagen, and Phase Forward. All of       knowledge in the benefits of cord blood
      these companies are listed on the NYSE and       banking, arouse public interest in cord blood
      none of them seem to have cord blood             banking, and garner support in the
      storage facilities but, like CCBS, we agree      government. If they are able to further this,
      that "an analysis of publicly traded             five year target penetration will be .01% to
      comparable companies is not                      .015%.
      mathematical; rather, it involves complex
      consideration and judgments regarding            Position Within the Industry
      differences in financial and operating
                                                       Founded in 2001, Beijing Jiachenhong
      characteristics of the comparable
                                                       Biological Technologies Ltd.("Jiachenhong") is
      companies and other factors that could
                                                       a pioneer in the field of hematopoietic stem-
      affect the public trading of the comparable
                                                       cell research and offers state of the art
                                                       medical services.
                                                       CCB's Beijing Cord Blood Bank ("the Bank"),the
*           CCBS QGEN PFWD BABY                        first of its kind in China granted an Umbilical
Forward P/E 13      25.01 41.77 28.87                  Cord Blood Stem Cell Storage Permit by the
Price/Sales 5.09    4.54 3.07 2.37                     Ministry of Health ("the MOH") provides a full
TEV/EBITDA 9.19     16.89 16.93 13.64                  range of premier collection,
Market Cap 395.27M  632.94 385.28 5.05B                examination,separation, matching and storage
       *Comparables Data from Bloomberg                services.China Cord was the third in the
                                                       Guangdong Market to become accredited and
                                                       granted with a "blood station license" by the
                                                       Ministry of Health of The People's Republic of
      The size of the Guangdong market is by far the   China and Health Bureau of Guangdong
      largest market that China Cord is based with     Province in June 2006. Founded in 2001,
      14 million and 15 million babies being born in   Beijing Jiachenhong Biological Technologies
      2010 and 2011 respectively. We found this        Ltd.("Jiachenhong") is a pioneer in the field of
      number using a 7% population growth rate         hematopoietic stem-cell research and offers
      along with a birth rate of 11.7%.                state of the art medical services.
      ( The Beijing market is        CCB's Beijing Cord Blood Bank ("the Bank"),the
      dwarfed by Guangdong with a little over          first of its kind in China granted an Umbilical
      930,000 and 980,000 babies being born in         Cord Blood Stem Cell Storage Permit by the
      2010 and 2011 respectively. We found this        Ministry of Health ("the MOH") provides a full
      number using a population growth rate of .6%
range of premier collection,                             processing fee from then on it makes a
examination,separation, matching and storage             smaller but sizeable profit from its storage
services.                                                fees. The new subscribers enter into a 18-
                                                         year agreement for the storage. CCBS true
                                                         growth will come about if they can expand
        For Year Ended March 31st 2009                   their current business model into a must of
                                2009     2008    2007    have medical hedge for Chinese parents
                                                         concerned about the health of their only
New Subscriber Sign ups       34,678   26,060   12,347
New Donations Accepted        698      693      1,412

Total Units Stored            94,288   58,912   30,906
Units Deposited by                                         150,000
Subscribers                   84,060   49,382   23,322                                    Net Income
Units Contributed by Donors   10,228   9,530    7,584

Forward Outlook                                                     0
                                                                                          Sign ups
                                                                        2007 2008 2009
Stagnant Birth Rate: The city of Beijing has a
low birth rate with the lowest total fertility
rate in the country at .67. The city has just a          At our forward price of $6.12 we do not feel
few more births each year than deaths which              that this stock provided a great opportunity
place CCB growth at a potential stand still in           for profit. Although there are significant
Beijing if they can not find a way to reach              opportunities for growth in China, CCBS has
further market penetration within the                    not demonstrated enough growth potential
municipality.                                            to warrant a forward significantly greater
However the future does look bright with CCB             than its current price.
recent expansion into the Guangdong
province. With a high birth rate approaching
11% they are poised to take advantage of one
the fastest developing provinces within China.           Sources:

China Cord Blood Strategy
China Cord Blood Services bases its growth
and revenues off of growth in new              
subscribers. CCBS fee system is built around
a large initial processing fee or a financed

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