Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Stoxx Europe Small 200 Price Eur / Technical Analysis

With further consolidation likely for the broad indexes, we want to stick with areas of the market that have shown an ability to outperform despite the broader consolidation. For that we are returning to Technology and Services. Roughly half of today’s individual stock recommendations are domiciled in Japan, while the remainder hail from India and Russia.

With further consolidation likely for the broad indexes, we want to stick with areas of the market that have shown an ability to outperform despite the broader consolidation. For that we are returning to Technology and Services. Roughly half of today’s individual stock recommendations are domiciled in Japan, while the remainder hail from India and Russia.

Global Equity Strategy U.S. Fed Cut, Now What?

Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

<ul>
<li>Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth</li>
<li>Widespread adoption of Hydrogen considered unlikely</li>
<li>41% of Platinum &amp; 84% of Palladium reliant on autocatalyst demand</li>
<li>Hybrids in Europe up 107% in three years at 1:7 to diesel counterparts, without subsidies</li>
<li>Hybrid premium ~ 8% like-for-like over a combustion vehicle </li>
<li>Carpooling/ride-share platforms have hallmarks of being a macro-trend</li>
<li>W. Asian carpool CAGR of 77.6% over past 11 years</li>
<li>Est. by close 2019 &gt;62m people globally will utilise trans. platforms, forgoing car ownership
</li>
<li>Adverse impact on vehicle growth, models, drive-trains, R&amp;D, insurance &amp; finance </li>
<li>Logistics industry diesel transitioning will affect LT PGM demand, in particular platinum</li>
<li>Primary platinum-surplus to grow in time, downward pressure on price</li>
</ul>
Auto-catalysts make up the majority of platinums (41%) and in particular, palladium (84%) end use demand.  To determine the future demand profile for PGMs, therefore, we examined the types and likelihood of future drivetrains, as well as technologies affecting unit demand.
Hydrogen's key attraction is its potential green credentials, and if it was to ever became a reality, resultant PGM catalyst demand would outstrip all existing suppliers.  To achieve that noble aim, however, gargantuan energy resources would be needed to conduct electrolysis of water, thermodynamically, a very energy intensive process.  Our analysis concludes that hydrogen will remain a boutique industry, confined to economies with abundant hydrocarbon production, with conversion relying on steam reformation.  Overall impact of hydrogen on PGM demand, will be marginal at best.
Presently, EVs have substantial range and recharge hurdles to overcome before they could ever be a primary mode of transport for many; with global demand primarily driven by Chinese directives, not by the Western consumer.  In the short to medium-term, we do not expect EVs to impact PGM demand significantly.  However, we preface that statement by our belief that in the longer-term, the largest adopter of EVs will be within the commercial logistics sector, currently dominated by diesel power plants, which rely on a substantial amount of platinum within its auto-catalysts.  Widespread adoption of EVs and robotic drones and the replacement of traditional diesel drivetrains will only exacerbate current over-supply in platinum, in time, we forecast its price to fall substantially.
Hybrid sales are up 107% in Europe over the past three years without any state subsidies.  It is reasonable to assume that potential demand of PGMs have, and will continue to be, stymied by hybrid advances.  But we expect overall (even modest) growth in car volume sales should maintain current market dynamics, in the short to medium term.
Carpooling and a host of other transactional transport options are now a realistic, flexible and affordable life-style choice, that contradict the necessity of car ownership.  Especially among the inner-city urbanites, with Asia averaging a CAGR of 77.6% over the past decade.  Car manufacturers are already experiencing significant sales headwinds.  On average it has been found that members/fleet ratio (i.e. No. of cars divided by No. of members) range between 61 – 76, a fraction of unit demand when compared with an average Western family of three or four members, often owning two vehicles.  Using decade average regional CAGRs, projecting three years in advance, the potential number of decreased car sales globally could reach 62m by the close of 2019.  To put that into context, Volkswagen and Toyota produce between 10 to 11m  units each pa.  This raises the question of whether recent sluggish global car sales is somehow related to the almost exponential growth in carpooling/ride-share platforms?


Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth
Widespread adoption of Hydrogen considered unlikely
41% of Platinum &amp; 84% of Palladium reliant on autocatalyst demand
Hybrids in Europe up 107% in three years at 1:7 to diesel counterparts, without subsidies
Hybrid premium ~ 8% like-for-like over a combustion vehicle 
Carpooling/ride-share platforms have hallmarks of being a macro-trend
W. Asian carpool CAGR of 77.6% over past 11 years
Est. by close 2019 &gt;62m people globally will utilise trans. platforms, forgoing car ownership

Adverse impact on vehicle growth, models, drive-trains, R&amp;D, insurance &amp; finance 
Logistics industry diesel transitioning will affect LT PGM demand, in particular platinum
Primary platinum-surplus to grow in time, downward pressure on price

Auto-catalysts make up the majority of platinums (41%) and in particular, palladium (84%) end use demand.  To determine the future demand profile for PGMs, therefore, we examined the types and likelihood of future drivetrains, as well as technologies affecting unit demand.
Hydrogen's key attraction is its potential green credentials, and if it was to ever became a reality, resultant PGM catalyst demand would outstrip all existing suppliers.  To achieve that noble aim, however, gargantuan energy resources would be needed to conduct electrolysis of water, thermodynamically, a very energy intensive process.  Our analysis concludes that hydrogen will remain a boutique industry, confined to economies with abundant hydrocarbon production, with conversion relying on steam reformation.  Overall impact of hydrogen on PGM demand, will be marginal at best.
Presently, EVs have substantial range and recharge hurdles to overcome before they could ever be a primary mode of transport for many; with global demand primarily driven by Chinese directives, not by the Western consumer.  In the short to medium-term, we do not expect EVs to impact PGM demand significantly.  However, we preface that statement by our belief that in the longer-term, the largest adopter of EVs will be within the commercial logistics sector, currently dominated by diesel power plants, which rely on a substantial amount of platinum within its auto-catalysts.  Widespread adoption of EVs and robotic drones and the replacement of traditional diesel drivetrains will only exacerbate current over-supply in platinum, in time, we forecast its price to fall substantially.
Hybrid sales are up 107% in Europe over the past three years without any state subsidies.  It is reasonable to assume that potential demand of PGMs have, and will continue to be, stymied by hybrid advances.  But we expect overall (even modest) growth in car volume sales should maintain current market dynamics, in the short to medium term.
Carpooling and a host of other transactional transport options are now a realistic, flexible and affordable life-style choice, that contradict the necessity of car ownership.  Especially among the inner-city urbanites, with Asia averaging a CAGR of 77.6% over the past decade.  Car manufacturers are already experiencing significant sales headwinds.  On average it has been found that members/fleet ratio (i.e. No. of cars divided by No. of members) range between 61 – 76, a fraction of unit demand when compared with an average Western family of three or four members, often owning two vehicles.  Using decade average regional CAGRs, projecting three years in advance, the potential number of decreased car sales globally could reach 62m by the close of 2019.  To put that into context, Volkswagen and Toyota produce between 10 to 11m  units each pa.  This raises the question of whether recent sluggish global car sales is somehow related to the almost exponential growth in carpooling/ride-share platforms?

PGMs: Facing Technological Obsolescence? (P. 2)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

This week in StubWorld ...
<ul>
<li>Saudi Arabian Oil Co's 19.9% stake in Hyundai Oilfield spotlights <a href="https://www.smartkarma.com/entities/24075" target="_blank" data-smartkarma-citation="entities:24075:1">Hyundai Heavy Industries Holdings (267250 KS)</a>'s deep discount to NAV.</li>
<li>
<a href="https://www.smartkarma.com/entities/8517" target="_blank" data-smartkarma-citation="entities:8517:1">United Co Rusal (486 HK)</a>'s discount to NAV narrows after sanctions are lifted, but remains well off its pre-sanctions level.</li>
</ul>
Preceding my comments on HHI and Rusal are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.

This week in StubWorld ...

Saudi Arabian Oil Co's 19.9% stake in Hyundai Oilfield spotlights Hyundai Heavy Industries Holdings (267250 KS)'s deep discount to NAV.

United Co Rusal (486 HK)'s discount to NAV narrows after sanctions are lifted, but remains well off its pre-sanctions level.

Preceding my comments on HHI and Rusal are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.

StubWorld: Aramco's Stake Reaffirms Hyundai Heavy's NAV; Rusal Gains After Sanctions Lifted

On 23 March 2015, the shares of  <a href="https://www.smartkarma.com/entities/8517" target="_blank" data-smartkarma-citation="entities:8517:1">United Co Rusal Plc (486 HK)</a> were admitted to listing on PJSC Moscow Exchange MICEX ("Moscow Exchange"). The trading of shares on the Moscow Exchange <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0331/LTN20150331207.pdf" target="_blank">commenced</a> on 30 March 2015. There was no issue of new shares.As Rusal's key listed holding <a href="https://www.smartkarma.com/entities/22761" target="_blank" data-smartkarma-citation="entities:22761:1">MMC Norilsk Nickel PJSC (ADR) (MNOD LI)</a> also trades in Moscow, transferring shares out of HKEx makes sense for those investors wishing to trade both entities in the same time zone and settlement rules.Despite inquiries with…

On 23 March 2015, the shares of  United Co Rusal Plc (486 HK) were admitted to listing on PJSC Moscow Exchange MICEX ("Moscow Exchange"). The trading of shares on the Moscow Exchange commenced on 30 March 2015. There was no issue of new shares.As Rusal's key listed holding MMC Norilsk Nickel PJSC (ADR) (MNOD LI) also trades in Moscow, transferring shares out of HKEx makes sense for those investors wishing to trade both entities in the same time zone and settlement rules.Despite inquiries with…

Rusal (HK) At 30% Discount to Moscow Line BUT…

This week in StubWorld ...<ul><li>Now is not the time to set-up <a href="https://www.smartkarma.com/entities/15778" target="_blank" data-smartkarma-citation="entities:15778:1">Pasona Group Inc (2168 JP)</a> as the impact from <a href="https://www.smartkarma.com/entities/14502" target="_blank" data-smartkarma-citation="entities:14502:1">Benefit One Inc (2412 JP)</a>'s likely TSE1 inclusion has more to run. </li></ul>This, and other relationships discussed below, trade with: 1) a minimum liquidity threshold of US$1mn on a 90-day moving average; and 2) a minimum 20% 'market capitalisation' threshold, whereby the value of the holding/opco held must be at least 20% of the parent's market cap.A detailed NAV for a number of these parent/holding relationships highlighted can be found in our Holdco monitor.My comments on Pasona, <a href="https://www.smartkarma.com/entities/10433" target="_blank" data-smartkarma-citation="entities:10433:1">Swire Pacific Ltd Cl A (19 HK)</a>, <a href="https://www.smartkarma.com/entities/19718" target="_blank" data-smartkarma-citation="entities:19718:1">Jardine Matheson Hldgs Ltd (JM SP)</a> and<a href="https://www.smartkarma.com/entities/8517" target="_blank" data-smartkarma-citation="entities:8517:1">United Co Rusal Plc (486 HK)</a> follow the weekly setup/unwind tables.(Market cap and liquidity noted below are in US$. Liquidity is assessed on a 3-month average)

This week in StubWorld ...Now is not the time to set-up Pasona Group Inc (2168 JP) as the impact from Benefit One Inc (2412 JP)'s likely TSE1 inclusion has more to run. This, and other relationships discussed below, trade with: 1) a minimum liquidity threshold of US$1mn on a 90-day moving average; and 2) a minimum 20% 'market capitalisation' threshold, whereby the value of the holding/opco held must be at least 20% of the parent's market cap.A detailed NAV for a number of these parent/holding relationships highlighted can be found in our Holdco monitor.My comments on Pasona, Swire Pacific Ltd Cl A (19 HK), Jardine Matheson Hldgs Ltd (JM SP) andUnited Co Rusal Plc (486 HK) follow the weekly setup/unwind tables.(Market cap and liquidity noted below are in US$. Liquidity is assessed on a 3-month average)

StubWorld - Pasona, Swire, Jardine, Rusal

Russia

MMC Norilsk Nickel PJSC produces nickel, palladium, platinum and copper. The Company also produces various by-products such as cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and sulfur.

Price Gauge
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Mmc Norilsk Nickel Pjsc (Adr) (MNOD LI)

Global Equity Strategy U.S. Fed Cut, Now What?

With further consolidation likely for the broad indexes, we want to stick with areas of the market that have shown an ability to outperform despite...

Vermilion Research

PGMs: Facing Technological Obsolescence? (P. 2)

Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth Widespread adoption of Hydrogen considered unlikely 41% of...

Boost Research

StubWorld: Aramco's Stake Reaffirms Hyundai Heavy's NAV; Rusal Gains After Sanctions Lifted

This week in StubWorld ... Saudi Arabian Oil Co's 19.9% stake in Hyundai Oilfield spotlights Hyundai Heavy Industries Holdings (267250 KS)'s deep...

David Blennerhassett

Rusal (HK) At 30% Discount to Moscow Line BUT…

On 23 March 2015, the shares of United Co Rusal Plc (486 HK) were admitted to listing on PJSC Moscow Exchange MICEX ("Moscow Exchange"). The...

David Blennerhassett

StubWorld - Pasona, Swire, Jardine, Rusal

This week in StubWorld ...Now is not the time to set-up Pasona Group Inc (2168 JP) as the impact from Benefit One Inc (2412 JP)'s likely TSE1...

David Blennerhassett

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