In this briefing:
- SYNEX: New Smartphone Launches Help Drive Earnings Momentum in 2019
- CStone Pharma (基石药业) Post-IPO: Strong Debut but Lacks near Term Catalysts
- Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
- Baidu (BIDU): Stagnant in 4Q18, Wrong Change Feeds a 24% User Increase to Google
1. SYNEX: New Smartphone Launches Help Drive Earnings Momentum in 2019
SYNEX’s 4Q18 net profit was at Bt190m (+16%YoY, +18QoQ), in-line with our expectation
- Record-high level of sales at Bt10.38bn is the major contributor to impressive 4Q18 performance. Meanwhile , gross margin drops below 4% in the first time due to changing product mix towards more on device segment
- SYNEX post 2018 net profit of Bt721m (+15%YoY) driven by 18% increase in revenue
- We maintain our positive view toward FY19-20E earnings outlook driven by (1) number of flagship smartphone model launches and new brands for low budget users, Neffos, and, (2) higher sales contribution from high-margins product such as gaming desktops and post-sales services.
We maintain our BUY rating with a new target price of Bt16.80 (previous target price at Bt15.0) derived from 17xPE’2019E, which is the average of the World information and technology sector
2. CStone Pharma (基石药业) Post-IPO: Strong Debut but Lacks near Term Catalysts
CStone Pharma’s IPO was priced at HKD 12.00/share and started trading today. In this insight, we summarize the allocation, the use of proceeds and recap our view on our valuation. We also look at past few biotech listings and discuss our thoughts on the market sentiments. We are of the view that despite a strong debut performance, CStone lacks near term catalysts that can continue to drive performance after the first day.
Our Previous Coverage of CStone
- CStone Pharma (基石药业) IPO: Strong Assembly and Backing (Part 1)
- CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
3. Futu Holdings Pre-IPO – FY18 Updates And Quick Thoughts on Valuation
Futu Holdings Ltd (FHL US) plans to raise around US$300m in its US IPO. The company is backed by Tencent Holdings (700 HK) , Matrix Partners and Sequoia.
In my earlier insight, Futu Holdings Pre-IPO – Great Metrics but in a Commoditised Industry, I looked at the company’s background and past financial performance along with some of the other firms that are competing in the same space.
This insight covers the positive and negative takeaways from the FY18 updated filing and also includes our thoughts on valuation.
4. Baidu (BIDU): Stagnant in 4Q18, Wrong Change Feeds a 24% User Increase to Google
- Baidu posted a weak result for 4Q2018.
- We believe it is a wrong decision to change Baidu into an in-house search engine.
- Alphabet Inc Cl C (GOOG US) ’s monthly active users in mainland China increased 24% QoQ in January 2019.
- We believe Baidu’s stock price has been fairly impacted.
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