In this briefing:
- CStone Pharma (基石药业) Post-IPO: Strong Debut but Lacks near Term Catalysts
- Continuing Positive Outlook for Last Mile Industrial Real Estate Supports New Financings Globally
- Notes from the Silk Road: Nine Dragons Paper Holdings (2689.HK) – Potential Volatility Risk
- Asia’s External Balances Signal Safety for Investors
- Sharp MoM Decline In January Semi WFE Sales Casts A Spanner In Second Half Recovery Works.
1. 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)
2. Continuing Positive Outlook for Last Mile Industrial Real Estate Supports New Financings Globally
- We published a series of Insights explaining our positive outlook for the industrial segment of the global Real Estate sector.
- Currently, companies in this segment are capitalizing on strong fundamentals to raise new equity capital. They are using the proceeds from these deals to fund property acquisitions and developments, and to deleverage their balance sheets, thereby setting the stage for continuing growth.
- This trend is especially notable because it is taking place in a range of geographic locations, around the world.
3. Notes from the Silk Road: Nine Dragons Paper Holdings (2689.HK) – Potential Volatility Risk
On the eve of the Chinese New Year holiday Nine Dragon Paper (NDP) released a profit warning regarding their H1 FY19 fiscal earnings. This warning came ahead of the 26th February 2019 Board Meeting.
Management guidance calls for a decrease for H1-2019 of approximately 45% YoY and revenue line of not less than RMB2.4bn. NDP cites an increase in raw materials and a decrease in the selling price of the products.
Despite the negative news, the share price has rallied 15% since the announcement. We examine the implications.
4. Asia’s External Balances Signal Safety for Investors
Asian currencies are, in general, well supported by economic fundamentals in the form of external surpluses and interest rate differentials. Indeed, most Asian currencies display an appreciating bias, contrary to perceptions in 2018 when all of them lost ground to the US dollar. Over the last year the underlying external strength has been reflected in Asian currency appreciation against the US dollar.
5. Sharp MoM Decline In January Semi WFE Sales Casts A Spanner In Second Half Recovery Works.
According to SEMI, North American (NA) WFE sales for January 2019 fell to $1.9 billion, down ~10% sequentially and ~20% YoY. This was an abrupt reversal of the recovery trend implied by the December 2018 sales of $2.1 billion and is the biggest monthly sales YoY decline since June 2013.
Just as declining monthly WFE sales preceded the current semiconductor downturn by some six months, the continuation of December’s MoM WFE decline reversal trend was a prerequisite for a second half recovery in the broader semiconductor sector. With that trend well and truly broken, we now anticipate a more delayed, gradual and prolonged recovery, one which is now unlikely to materialise until late third, early fourth quarter 2019.
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