Equity analyst UK & Europe, UK Long Short

Peter Toeman

Equity analyst UK & Europe

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

The UK's principal share index FTSE 100 closed 2018 marginally lower than its level at the start of the Millenium
 In contrast with the lackluster performance of the stockmarket, nominal GDP of the UK economy almost doubled over the period
Relative to the domestic economy FTSE 100 looks marginally undervalued which may explain the rebound seen in the first month of this year
On the other hand, courtesy of the political decision to leave the European Union, the outlook has never been more uncertain
Major structural change involving tearing up a 40 year arrangement with the UK's largest trading partner is bound to have significant and unpredictable consequences 
We offer a long/short portfolio of UK stocks designed to exploit emerging themes

The UK's principal share index FTSE 100 closed 2018 marginally lower than its level at the start of the Millenium
 In contrast with the lackluster performance of the stockmarket, nominal GDP of the UK economy almost doubled over the period
Relative to the domestic economy FTSE 100 looks marginally undervalued which may explain the rebound seen in the first month of this year
On the other hand, courtesy of the political decision to leave the European Union, the outlook has never been more uncertain
Major structural change involving tearing up a 40 year arrangement with the UK's largest trading partner is bound to have significant and unpredictable consequences 
We offer a long/short portfolio of UK stocks designed to exploit emerging themes 

FTSE 100: Twenty Years of Going Nowhere (Almost)

Equity Bottom-Up

The political decision to exit the European Union has unpredictable negative consequences for both the UK economy and stockmarket. My purpose is to identify a portfolio of UK shorts and occasional longs.  
Centrica PLC: What does it do ?
Centrica, through its operating subsidiary British gas is the largest of the six major energy supply companies operating in the UK. The core activity, and providing around 70% of revenues, is energy supply to households and businesses in the UK, US and Canada. The group has a 28% share of the home energy market in the UK and 13% of the market in US. In energy supply to businesses, Centrica is the second largest supplier in the US where it claims a 15% market share. Beyond energy supply Centrica has three established business, Services, Trading, and E&amp;P, and two nascent high growth businesses Distributed Energy &amp; Power and Connected Home
Why is it in the short portfolio?
Energy Supply is dominated by regulation and price conscious consumers which has lead management to predict a flat revenue outcome over the long term. Customer numbers are declining, the recently introduced default tariff price cap will eat into revenues, and higher gas prices are unhelpful.
Recognizing the problem management intend to treat Energy Supply as a cash-cow re-investing its cash-flow into the growth businesses. However the available upside from these new ventures may not provide sufficient compensation. More immediately consideration of cash-flow suggests the dividend, currently supporting the shares with a near 9% yield, may not prove sustainable.

The political decision to exit the European Union has unpredictable negative consequences for both the UK economy and stockmarket. My purpose is to identify a portfolio of UK shorts and occasional longs.  
Centrica PLC: What does it do ?
Centrica, through its operating subsidiary British gas is the largest of the six major energy supply companies operating in the UK. The core activity, and providing around 70% of revenues, is energy supply to households and businesses in the UK, US and Canada. The group has a 28% share of the home energy market in the UK and 13% of the market in US. In energy supply to businesses, Centrica is the second largest supplier in the US where it claims a 15% market share. Beyond energy supply Centrica has three established business, Services, Trading, and E&amp;P, and two nascent high growth businesses Distributed Energy &amp; Power and Connected Home
Why is it in the short portfolio?
Energy Supply is dominated by regulation and price conscious consumers which has lead management to predict a flat revenue outcome over the long term. Customer numbers are declining, the recently introduced default tariff price cap will eat into revenues, and higher gas prices are unhelpful.
Recognizing the problem management intend to treat Energy Supply as a cash-cow re-investing its cash-flow into the growth businesses. However the available upside from these new ventures may not provide sufficient compensation. More immediately consideration of cash-flow suggests the dividend, currently supporting the shares with a near 9% yield, may not prove sustainable.

Centrica PLC (CNA LN): Lots of Gas but No Fizz

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

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.

Global Markets Outlook: Maintain Defensive Posture

Global Cross-Asset Energy Analyst, VAC Investments

Aaditya Chintalapati, CFA

Global Cross-Asset Energy Analyst

<h2>Oil Price</h2>Crude prices had a volatile week, with WTI ending c.2% lower at USD 58.27/bbl, while Brent was largely flat at USD 63.61/bbl. Downside pressure on WTI following the TransCanada Keystone pipeline restart early in the week was modestly moderated by the extension of OPEC cuts to end-2018 from March next year, previously. OPEC and Russia have agreed to extend the current production cuts until the end of 2018 (previously set to expire in March 2018). In addition, Nigeria and Libya, which are…

Oil PriceCrude prices had a volatile week, with WTI ending c.2% lower at USD 58.27/bbl, while Brent was largely flat at USD 63.61/bbl. Downside pressure on WTI following the TransCanada Keystone pipeline restart early in the week was modestly moderated by the extension of OPEC cuts to end-2018 from March next year, previously. OPEC and Russia have agreed to extend the current production cuts until the end of 2018 (previously set to expire in March 2018). In addition, Nigeria and Libya, which are…

Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>UK CPI inflation disappointed the consensus again by holding at 2.6% in July, in line with my forecast. The underlying inflationary impulse and trend strengthened.</li>
<li>Transport prices weighed most, as expected. The offsetting news in my forecast was from weaker games &amp; toys and strength in car insurance and clothing. Payback looks set to occur in all of these areas between August and September.</li>
<li>
Weighting changes for 2017 shifted the underlying seasonality and may contribute to more market surprises.…</li>
</ul>


UK CPI inflation disappointed the consensus again by holding at 2.6% in July, in line with my forecast. The underlying inflationary impulse and trend strengthened.
Transport prices weighed most, as expected. The offsetting news in my forecast was from weaker games &amp; toys and strength in car insurance and clothing. Payback looks set to occur in all of these areas between August and September.

Weighting changes for 2017 shifted the underlying seasonality and may contribute to more market surprises.…


UK Inflation: Awaiting Final Autumnal Ascent

United Kingdom

Centrica PLC is an integrated energy company offering a wide range of home and business energy solutions. The Company sources, generates, processes, stores, trades, saves and supplies energy and provides a range of related services.

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Centrica PLC (CNA LN)

FTSE 100: Twenty Years of Going Nowhere (Almost)

The UK's principal share index FTSE 100 closed 2018 marginally lower than its level at the start of the Millenium In contrast with the lackluster...

Boost Research