StemLife and TMC Life – Vincent Tan to strike a deal?

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May 16 2008
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Two stocks seemed to be courting each other. Before that these two stocks seemed to emulate kids’ story – Rabbit and Turtle. There’s a small twist though. While the arrogant rabbit decided to take a nap the turtle slowly crawled past the rabbit to the finish line. The rabbit tried to catch up but it was too late. But in this story directed and written by Steven Spielberg, there was an old fox watching both rabbit and turtle with saliva dripping all over the place. The fox knew the saying “slow and steady win the race” and hence he sat there waiting.

So, who is this rabbit, turtle and the fox? The rabbit is StemLife Berhad (KLSE: STEMLFE, stock-code 0137), the turtle is TMC Life Sciences Bhd (KLSE: TMCLIFE, stock-code 0101) and the fox is, you guess it, Berjaya Group tycoon Vincent Tan. I’ve wrote in my previous articles that there’re many options and reasons for this tycoon who was also involved in the infamous Lingam-Gate scandal. What he plans to do with TMC Life is not important. What is important is he is hooked with TMC Life and we shall follow his foot steps, if you haven’t done so. Read on.

StemLife TMC Life Vincent TanTMC Life issued shares amounted to 185,163,000 as of today. Based on the filing (Form 29B) dated 8th May 2008, Vincent Tan via his subsidiary Juara Sejati Sdn Bhd has acquired 39,655,000 shares representing 21.42 percent. Vincent Tan bought a 10.26% stake in TMC Life at an average price of RM1.29 a share back in Jan 2008. Thus, this should serve as a small warning to some of you who plan to jump in blindly because between Jan 2008 and now (May 2008) Vincent Tan has already made good profit and there’s no guarantee that he is not jacking up the stock price before dumping it – the old fox’s trick. This is however only one of the possibilities.

Interestingly Dr Colin Lee, TMC’s founder and managing director, has also up his stake, although on a much smaller scale to 24.02 percent or 44,485,209 shares. Both Dr Colin Lee and his deputy Dr Wong Pak Seng (Executive Director) are conservative persons who despise speculating or frying their own shares; at least that was my impression when I happened to chat with them not many moons ago. They would go crazy when you tease them that their stock sucks compared to StemLife which skyrocketed during that period of time. Of course if I were to joke about it again this time, most probably they will grin from ear to ear and throw it back at me.

StemLife stock chartTMC Life stock chartAnyway, if you’ve either StemLife of TMC Life shares in your portfolio you should be able to see how the once neglected TMC Life is slowly overtaking StemLife’s share price. In fact TMC stock reaches its highest level since it was listed in Oct 2005. Psychologically, the RM2.00 level should be the immediate resistance level for TMC Life so it’s wise to take some profits or money off the table.

On another note, Vincent Tan has reduced slightly his stake in StemLife from 13.6 percent to 13.5 percent as of Feb 2008 and has been quiet since then. The million-dollar question is what he plans to do with both companies – StemLife the Rabbit and TMC Life the Turtle. While it’s true that StemLife’s business is pretty straight forward and depends on marketing for stem-cell storage, the same cannot be said about TMC. Colin’s company depends heavily on fertility treatment which contributes about 80 percent to the revenue. It’s indeed hard work; Colin hoped TMC could derive 50 percent of revenue from non-fertility services for the financial year 2008 and stem-cell storage was identified as the main service for this purpose.

Vincent Tan to merge StemLife and TMCLifeDoes it make sense to merge both StemLife and TMC Life into one entity? Absolutely! There’s a good synergy to consolidate both company. Over the years, TMC Life managed to attract its own loyal customers to whom it could leverage on for the stem-cell business. But most of these existing loyal customers already stored their babies’ stem-cells elsewhere including competitor StemLife. Maybe TMC could grab the deal from subsequent babies. Therefore, it’s as good as starting stem-cell service from zero. However if StemLife and TMC Life could be merged it would provide cost-saving in running the show, not to mention StemLife’s expertise in marketing their products. Both entities could cross-sell and a merged StemLife-TMC Life could become the one-stop supermarket in the healthcare industry.

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TMCLife has a new hospital which has completed but looks like they have never make much sound of it. May be because CF not issued ?

And also, they have been doing quite well is selling the quite expensive wellcare product (i am one of their customer) and they also keep quiet of it.. I wonder why..

I don’t see much value in these stocks.

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