In this briefing:
- Pinduoduo (PDD US): Follow-On Offering Is a Smart Move for the Company, Rather than for Investors
- A Huge Wave of New LNG Projects Coming in the Next 18 Months: Positive for The E&C Companies
1. Pinduoduo (PDD US): Follow-On Offering Is a Smart Move for the Company, Rather than for Investors
With the shares hitting all-time highs, Pinduoduo (PDD US) announced a follow-on public offering to raise net proceeds (potentially of $1.1 billion) from the sale of 37 million ADS along with the placing of 14.8 million ADS from existing shareholders (post-lockup expiry).
We have been bulls on Pinduoduo with the shares up 60% since its IPO. While Pinduoduo is a good company, we believe this follow-on offering is highly opportunistic and provides limited upside to investors participating in this offering.
2. A Huge Wave of New LNG Projects Coming in the Next 18 Months: Positive for The E&C Companies
Our analysis shows that there are an unbelievable 25+ LNG developers that have stated (within the last year) they will take a final investment decision (FID) on their LNG liquefaction plants in 2019. Unless demand surprises to the upside, the expected LNG supply deficit in the mid-2020s could easily turn into a glut. In total there is almost 250 million tonnes per annum (mtpa) of capacity that plans to take FID this year – the equivalent of 80% of current global supply. In total there are ~US$180bn of contracts up for grabs – it should be a bumper year for the oil service (E&C) companies. This should be positive for the LNG contractors such as Mcdermott Intl (MDR US), TechnipFMC PLC (FTI FP), Chiyoda Corp (6366 JP) and Jgc Corp (1963 JP) .
Exxon Q4’18 conference call, “While we see a lot of high growth opportunities in LNG, capacity will come on in big chunks. It won’t be necessarily coordinated, so we’ll see, I suspect, periods of oversupply.”
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