KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

31 August 2023: Wealth Product Ideas

FCN Theme 1 – Chinese CRO

  1. The Chinese Contract Research Organization (CRO) sector is showing signs of recovery in China’s healthcare industry after a two-year correction.
  2. The defensiveness of the sector is attributed to China’s domestic policy headwinds, such as anti-corruption measures.
  3. Leading players in the CRO sector are expected to experience a rebound in overseas R&D outsourcing demand within the next year.
  4. The sector offers attractive valuations, with negative factors already reflected in the pricing.
  5. WuXi AppTec (2359 HK) is identified as the top pick in the Chinese CRO space, with a positive outlook for overseas business-focused players like WuXi Bio (2269 HK).
  6. WuXi AppTec is favored due to its defensiveness in the China healthcare sector, unaffected by healthcare anti-corruption measures.
  7. The company has an attractive valuation with a favorable price-to-earnings ratio (PE) and potential earnings growth of over 20% year-over-year.
  8. WuXi AppTec has secured a significant order for the commercial manufacture of a blockbuster drug and stands to benefit from a potential global biotech funding recovery in the next 12 months.

Note: Pricing provided is indicative only. For updated pricing, please contact us directly.

FCN Theme 2 – Cloudflare

  1. Cloudflare (NET UN) presents investment potential despite volatile sentiment in a challenging macro environment.
  2. Management is addressing past execution issues and reporting strong improvements in sales cycles, instilling confidence in future growth.
  3. The stock’s current valuation suggests it is pricing in expected acceleration in growth.
  4. NET delivered solid 32% year-over-year revenue growth, slightly surpassing guidance, indicating positive performance.
  5. Despite a deceleration in growth compared to previous years, NET achieved robust customer growth, overcoming challenges in customer acquisition.
  6. Management’s guidance for up to 30% year-over-year growth in the third quarter and increased revenue expectations for the full year highlight positive growth prospects.
  7. The company’s attractive positioning as a leading vendor in the mission-critical space of enabling a faster internet allows for continuous expansion and increased market potential.

Note: Pricing provided is indicative only. For updated pricing, please contact us directly.

Payout Scenarios:

Investors receive corresponding interest payments every month and;

  1. KO Early Redemption: Principal + KO returns (KO event occurs only when the closing price of all underlying securities is higher than the knock-out price)
  2. Maturity Redemption: If no KO event occurs, the payout will be:
    1. If the final price of all underlying is higher than or equal to the strike price, investors will receive 100% cash return on their principal, along with the final interest.
    2. If the final price of one or more underlying is lower than the strike price, investors will receive 100% of their principal in the form of shares of the worst-performing stock and will also receive the final interest.

(Source: Bloomberg)

(Source: Bloomberg)

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