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IBDvalueinvestin (98.74)

IPO - CPC is the pick of the Week at IPO financial



June 24, 2009 – Comments (2) | RELATED TICKERS: CPC.DL2

The stock is listed as highly profitable with profit margins 20%-25% range and sales growing strongly with double digit gains.


The Shanghai-based company bills itself as the largest manufacturer of fluorinated specialty chemicals in China, based on sales. Its chemicals are used in a variety of industries, including electronics and pharmaceuticals.

Established in 1996, Chemspec counts Eli Lilly & Co. (LLY) and Merck KGaA ( MKGAF) among its customers. Sales and profit have been growing steadily, although income tax expenses dragged the company's first-quarter profit 38% below a year earlier, when it booked income tax gains.

Chemspec has suffered from the drop in demand for electronic devices, though sales of chemicals for the pharmaceutical and agrochemical industries more than compensated for a slowdown on the electronics side in the first quarter, when sales grew 23% to $29 million.

The company is expanding its manufacturing capacity, which is expected to double from its first-quarter level by the end of this year and nearly quadruple through the end of 2011.

The company's outlook is upbeat; it believes demand for specialty chemicals has been recovering and will grow later this year, particularly closer to the holiday season.

Underwriters Credit Suisse Group (CS), Citigroup Inc. (C), Oppenheimer & Co. and Piper Jaffray Cos. (PJC) have an option to purchase up to 1.22 million more ADSs to cover overallotments.


2 Comments – Post Your Own

#1) On June 24, 2009 at 12:15 PM, IBDvalueinvestin (98.74) wrote:

Interesting that CPC has almost traded its entire shares offered today in IPO. Should pop back up over $10+ on Thursday with the float almost gone.

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#2) On June 24, 2009 at 12:23 PM, IBDvalueinvestin (98.74) wrote:

Chemspec, which sold 8.08 million ADRs, was the eighth company to go public on a U.S. exchange in 2009.

It already has 7.64M volume . Entire offering almost gobbled up in 4 hours of trading. Float will be tight now, especially with shorting restricted on new IPO's .

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