IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Kokusai Electric  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> is a speciality manufacturer of semiconductor production equipment. <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; (KKR US)</a> seeks to raise about US$750 million through listing Kokusai.</li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/kokusai-electric-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:113787" rel="noopener">Kokusai Electric IPO: The Bull Case</a></strong></em>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.</li>
</ul>



Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR &amp; (KKR US) seeks to raise about US$750 million through listing Kokusai.
In Kokusai Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> is a speciality manufacturer of semiconductor production equipment. <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; (KKR US)</a> seeks to raise about US$750 million through listing Kokusai.   </li>
<li>Kokusai has the leading market share in the batch deposition equipment market and the second largest market share in the treatment equipment market, according to TechInsights and Gartner.</li>
<li>The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service revenue, solid gross margin trends and modest leverage.</li>
</ul>



Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR &amp; (KKR US) seeks to raise about US$750 million through listing Kokusai.   
Kokusai has the leading market share in the batch deposition equipment market and the second largest market share in the treatment equipment market, according to TechInsights and Gartner.
The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service revenue, solid gross margin trends and modest leverage.


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

<ul>
<li>We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)</li>
<li>The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).</li>
<li>Japan and India remain top overweights, with many of today's buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.</li>
</ul>


We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)
The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).
Japan and India remain top overweights, with many of today's buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.


Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)

US Treasury (10 Yr Generic) / Technical Analysis

<ul>
<li>In our two previous Int'l Compass reports (Aug. 18 &amp; 24) we discussed that we were buyers on the pullback to the major $93 support level on MSCI ACWI (ACWI-US).</li>
<li>$93 on ACWI is 1+ year base support and a level that coincides with the 10-month uptrend. We remain bullish as long as the ACWI-US is above $93.</li>
<li>$93 on ACWI-US is likely the low for this pullback as long as the 10-year Treasury yield and DXY can stay below respective resistance levels (4.3%-4.35% and $103.70-$105.70).</li>
</ul>


In our two previous Int'l Compass reports (Aug. 18 &amp; 24) we discussed that we were buyers on the pullback to the major $93 support level on MSCI ACWI (ACWI-US).
$93 on ACWI is 1+ year base support and a level that coincides with the 10-month uptrend. We remain bullish as long as the ACWI-US is above $93.
$93 on ACWI-US is likely the low for this pullback as long as the 10-year Treasury yield and DXY can stay below respective resistance levels (4.3%-4.35% and $103.70-$105.70).


Further Declines in DXY, Sovereign Yields May Provide More Fuel for a Rally in Global Equities

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).</li>
<li>As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).</li>
<li>Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.</li>
</ul>


Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).
As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).
Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.


Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

Netherlands

ASM International N.V. develops, manufactures, markets, and services machines used to produce semiconductors.  The Company manufactures machines that process silicon wafers, and assemble and package semiconductors.  ASM operates in Europe, the United States, Japan, and elsewhere in Asia.

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Asm International Nv (ASM NA)

Kokusai Electric IPO: The Bear Case

The bear case rests on a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend,...

Arun George

Kokusai Electric IPO: The Bull Case

The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service...

Arun George

Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)

We remain bullish on global equities as long as major $93 support on $ACWI continues to hold (1+ year base support and the 10.5-month uptrend)....

Vermilion Research

Further Declines in DXY, Sovereign Yields May Provide More Fuel for a Rally in Global Equities

We continue to believe $93 on $ACWI is likely the low for this pullback as long as the 10-year Treasury yield $TNX and $DXY can stay below their...

Vermilion Research

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

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