Daily China: Forecasting the Semiconductor Market and more

In this briefing:

1. Forecasting the Semiconductor Market
2. Gold: Trade Agreement Could Change the Bullish Narrative
3. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting
4. Healius (HLS AU): An Unattractive Bid
5. Future Metals Curve in China

1. Forecasting the Semiconductor Market

This is the time of year that Objective Analysis releases its semiconductor forecast.  This post is based upon a video posted on the WeSRCH website that explains the Objective Analysis 2019 semiconductor forecast.

Although accurate semiconductor forecasts are straightforward to produce, the consistently-accurate methodology spelled out in this Insight is rarely used.

The forecast predicts that the downturn that the industry is currently entering will be longer than most, with profits eluding chip companies until 2022.

2. Gold: Trade Agreement Could Change the Bullish Narrative

INVESTMENT VIEW:
The same macro factors which knocked more than a third off Apple Inc (AAPL US)‘s share price have lifted Gold (GOLD COMDTY) prices by nearly 10% since Sept-18.  However, we believe the market narrative could swiftly reverse if the US and China reach a trade agreement in the coming weeks.  We would look to press our short on Gold…and even go long Apple. 

3. Chengdu Expressway (成都高速) IPO Review – Well-Managed but Unexciting

Chengdu Expressway Company Limited (1785 HK) is looking to raise US$112m in its upcoming IPO. 

The expressways that CEC operate are integral in Chengdu’s transport network. The expressways have been upgraded and expanded consistently over the past three years which has led to an increase in traffic and toll revenue. However, in terms of valuation, CEC will likely trade at a valuation closer to small expressway peers which implies a 10% downside.

In this insight, we will look at the company’s financial and operational performance, toll payment model, and compare its valuation to Hong Kong-listed expressway peers. We will also run the deal through our IPO framework.

4. Healius (HLS AU): An Unattractive Bid

Healius (HLS AU), formerly known as Primary Health Care (PRY AU), is a leading Australian owner of GP clinics and pathology centres. On 3 January 2018, Healius received an unsolicited and highly conditional proposal from Jangho Group Co Ltd A (601886 CH) for A$3.25 cash per share.

5. Future Metals Curve in China

Metals are an important part of China’s economic prowess. Specifically, metals are a spoke in the economic wheel with fortunes of commodities and real estate all centered around metals. As we look at metals futures, we see that most metals futures are very flat.