In this briefing:
- Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
- Screening the Silk Road: (Small-)Mid Cap Free Cash Flow
- Viva Biotech (维亚生物) IPO: Warning Signs from 2018 Numbers (Part 2)
- Koolearn (新东方在线) Trading Update – A Wobbly Start
- CanSino Biologics (康希诺) IPO Trading Update – Time to Cash Out
1. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
We view weakness in global equity markets over the past week as correcting a significant amount of the excess optimism. We recommend taking advantage of the pullback by adding exposure to our favorite areas – namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward. In today’s report we provide a technical appraisal of all major markets and highlight actionable stocks throughout the int’l Technology and Communications sectors.
2. Screening the Silk Road: (Small-)Mid Cap Free Cash Flow
In April 2018, we published a FCF screen with the sole aim of identifying potential names which could prove to be strong candidates in a Small-Mid Cap portfolio. We move to update this list with a strong bias to the mid-cap stocks appearing.
This screen performs well with markets where the value style is in favour. Given the market appears to be trending back to this style, we believe the Small-Mid Cap universe should capitalise on this over the next 12-months. We identify within the screen some high trading liquidity deep value candidates across the Asia Pacific universe.
Our updated 2019 list of names contains 17 stocks, with a more diversified spread of countries and sectors, compared to April 2018. A point to note is that basic material stocks have strengthened within the composition. Interestingly, the style of stock which has increased its presence amongst the list is the contrarian style, highlighting an opening up in value.
3. Viva Biotech (维亚生物) IPO: Warning Signs from 2018 Numbers (Part 2)
Viva Biotechnology, a China-based drug discovery company, is seeking to raise USD 200m to list on the Hong Kong Stock Exchange. It has recently obtained approval for listing by the Hong Kong Stock Exchange. In our previous insight (link here), we discussed the company’s fundamentals, its unique business model, its shareholders, and our thoughts on its valuation.
In this insight, we look at its latest prospectus and review our valuation for Viva Biotech.
4. Koolearn (新东方在线) Trading Update – A Wobbly Start
Koolearn (1797 HK) raised about US$214m at HK$10.20 per share, the mid-point of its IPO price range. We have previously covered the IPO in:
- Koolearn (新东方在线) IPO Review – Yet to See Results from Increased Spending
- New Regulatory Tightening on Online Education Reads Badly on Koolearn IPO
- Koolearn (新东方在线) Pre-IPO – Profitable Online Edu Company but Poor Sentiment Weighs
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
5. CanSino Biologics (康希诺) IPO Trading Update – Time to Cash Out
CanSino Biologics raised USD 148 million at HKD 22/share, at the high end of its guided price range. We have previously covered the IPO in the following note:
- CanSino Biologics (康希诺) IPO: Promising Pre-Clinical Results but Vaccine Scandal Weighs (Part 1)
- CanSino Biologics (康希诺) IPO: Thoughts on Valuation (Part 2)
- CanSino Biologics (康希诺) IPO: Valuation Update (Part 3)
- CanSino Biologics (康希诺) IPO: Valuation Attractive, Lilly Asia Doubling Up (Part 4)
In this insight, we will update on the deal dynamics, implied valuation, and include a valuation sensitivity table.
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