July 26, 2017 Open Letter to the Board of China Cord Blood Corp from Jayhawk Capital

NEW YORK, July 27, 2017 /PRNewswire/ --

The following is an open letter sent July 26, 2017 U.S. time to the Board of Directors of China Cord Blood Corp (NYSE: CO) from Jayhawk Capital.

We recommend the Board repurchase 30 million shares as an effective use of the excess cash on the balance sheet that benefits all shareholders.  Shareholders who would like to sell may do so of their own free will, while other shareholders like Jayhawk can hold their shares to participate in the future growth of the company.  This will increase the ownership of the remaining minority shareholders as well as the soon-to-be new majority shareholder, Nanjing Ying Peng Hui Kang Medical Industry Investment Partnership ("NYPHK").  NYPHK is an affiliate of the Sanpower Group, which recently completed the $820 million acquisition of Dendreon Pharmaceuticals LLC, the maker of a stem cell treatment for prostate cancer, from Valeant Pharmaceuticals International, Inc.

Following are four valuation models for China Cord based on free cash flow multiple, earnings multiple, asset value (balance sheet) and discounted cash flow:

Assuming the Board authorizes the share repurchase, and completes 30 million shares at an average price of $15 per share, the Company will still have over $100 million of cash on their balance sheet, plus generating $25 million of cash each quarter.  The reduction in share count would increase our average valuation of $59 per share to $74 per share, resulting in an increased value to the shareholders of the remaining 90.6 million shares (mostly NYPHK) of $1.4 billion!

We sincerely hope the Board immediately initiates this repurchase plan.  If the Board delays too long, the stock price could be above $20, which would greatly reduce the potential benefit to remaining shareholders.

Yours faithfully,

Jayhawk Capital

Media contact:
Michael D. Schmitz
+1 (785) 220-4085

SOURCE Jayhawk Capital