Cord blood and tissue banking service provider Cordlife Group looks expensive versus peers after its shares surged 37% from their issue price on the first day of trading, Maybank Kim Eng said.
Cordlife trades at 20 times its price-to-earnings ratio for the year ended June 2011, compared to 10-11 times for China Cord Blood Corp and Cryosite, the broker said.
“We believe that share price may start to retreat after the initial euphoria,” it said in a note.
Cordlife's shares were 0.7% lower at $0.73, but are 47% above the IPO price of $0.495.
Kim Eng said Cordlife generates a stable annual cash flow of about $5 million, and may acquire businesses in developing markets as it has the right of first refusal to buy Australia's Cordlife cord blood banking operations in Indonesia, the Philippines and India.
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