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

With U.S. markets stumbling, the MSCI ACWI index is breaking down to new lows: defensive Sectors remain attractive. Relative to MSCI ACWI however, emerging markets are the place to be. China, Brazil, Hungary, Qatar, India, Poland, and Indonesia all display positive price and/or RS trends. In this report we recap technical important levels on all major indexes and highlight attractive stocks within Real Estate, Health Care/Pharma, Precious Metals Mining, and Utilities.

With U.S. markets stumbling, the MSCI ACWI index is breaking down to new lows: defensive Sectors remain attractive. Relative to MSCI ACWI however, emerging markets are the place to be. China, Brazil, Hungary, Qatar, India, Poland, and Indonesia all display positive price and/or RS trends. In this report we recap technical important levels on all major indexes and highlight attractive stocks within Real Estate, Health Care/Pharma, Precious Metals Mining, and Utilities.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

We lower our fair value estimate for CLP to HKD 64 per share from HKD 70, following the decision by the government to cut the Scheme of Control, or SoC, regulated return on Hong Kong’s electric utilities to 8% from the current 9.99% from 2019 for 15 years. This outcome is 1% lower than our base-case assumption, leading us to downgrade our midcycle forecasts. However, there is no material change to our narrow moat rating, as the return of 8% is still above the firm’s weighted average cost of capital of 7.4%. In addition, we don’t expect CLP to cut its absolute dividend payouts, as the firm’s robust balance sheet and strong cash generation ability should be able to support its dividend payout policy. Track record also reaffirms this view: CLP maintained a stable dividend in 2009, when it received a cut in SoC return to 9.99% from 14.40%. Nonetheless, we think the shares are overvalued at the current level, trading at 1.9 times price/book, which is higher than its five-year average of 1.8 times. The earnings outlook is dampened following the reduced returns hurdle rate.The 2% cut in SoC return is in line with our worse-case scenario, and is 1% lower than our base-case assumption, and we expect CLP to see a 7.5% drop in our forecast earnings to HKD 12.3 billion, from 13.3 billion in 2019. This will also lead to a 7.3% cut in our midcycle earnings forecast to HKD 17.6 billion, as well as a 1.5% reduction in midcycle operating margin to 19.3%. Relative to <a href="https://www.smartkarma.com/entities/788" target="_blank" data-smartkarma-citation="entities:788:1">Power Assets Holdings Ltd (6 HK)</a>, we anticipate more weakness in CLP because the former only holds 33% in Hong Kong Electric and there is no impact to PAH’s dividend forecast, while the acquisition of <a href="https://www.smartkarma.com/entities/601" target="_blank" data-smartkarma-citation="entities:601:1">DUET Group (DUE AU)</a> mitigates the impact to returns and cash flow.Analysts: Jennifer Song and Lorraine Tan, CFA

We lower our fair value estimate for CLP to HKD 64 per share from HKD 70, following the decision by the government to cut the Scheme of Control, or SoC, regulated return on Hong Kong’s electric utilities to 8% from the current 9.99% from 2019 for 15 years. This outcome is 1% lower than our base-case assumption, leading us to downgrade our midcycle forecasts. However, there is no material change to our narrow moat rating, as the return of 8% is still above the firm’s weighted average cost of capital of 7.4%. In addition, we don’t expect CLP to cut its absolute dividend payouts, as the firm’s robust balance sheet and strong cash generation ability should be able to support its dividend payout policy. Track record also reaffirms this view: CLP maintained a stable dividend in 2009, when it received a cut in SoC return to 9.99% from 14.40%. Nonetheless, we think the shares are overvalued at the current level, trading at 1.9 times price/book, which is higher than its five-year average of 1.8 times. The earnings outlook is dampened following the reduced returns hurdle rate.The 2% cut in SoC return is in line with our worse-case scenario, and is 1% lower than our base-case assumption, and we expect CLP to see a 7.5% drop in our forecast earnings to HKD 12.3 billion, from 13.3 billion in 2019. This will also lead to a 7.3% cut in our midcycle earnings forecast to HKD 17.6 billion, as well as a 1.5% reduction in midcycle operating margin to 19.3%. Relative to Power Assets Holdings Ltd (6 HK), we anticipate more weakness in CLP because the former only holds 33% in Hong Kong Electric and there is no impact to PAH’s dividend forecast, while the acquisition of DUET Group (DUE AU) mitigates the impact to returns and cash flow.Analysts: Jennifer Song and Lorraine Tan, CFA

SoC Return Reset to 8% from 9.99%, and CLP's FVE Lowered to HKD 64

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The despatch of <a href="https://www.smartkarma.com/entities/19341" target="_blank" data-smartkarma-citation="entities:19341:1">Television Broadcasts Ltd (511 HK)</a>'s Offer Document has been delayed thrice since TLG’s <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0307/LTN20170307602.pdf" target="_blank">"bid"</a> failed to materialise.The last two despatch delays hinged on when the Takeovers and Mergers Panel (the “Panel”) would rule on the whitewash waiver. That Panel hearing, originally tabled for the 5 April, has been rescheduled for the 27 April.In this note, I detail why the whitewash waiver is required, recent decisions handed down by the Panel and whether or not this could jeopardise the outcome of the buyback/partial offer.

The despatch of Television Broadcasts Ltd (511 HK)'s Offer Document has been delayed thrice since TLG’s "bid" failed to materialise.The last two despatch delays hinged on when the Takeovers and Mergers Panel (the “Panel”) would rule on the whitewash waiver. That Panel hearing, originally tabled for the 5 April, has been rescheduled for the 27 April.In this note, I detail why the whitewash waiver is required, recent decisions handed down by the Panel and whether or not this could jeopardise the outcome of the buyback/partial offer.

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI) generated a 1% total return, which was not far behind that of the MSCI AC Asia Pacific Index. However, the 1% gain is hardly the full story for the 30 STI stocks in the year thus far.  All five Global Industry Classification Standards (GICS®) Sectors without STI representation also generated gains over the first 10 months. These Sectors are also at junctures of opportunity and challenge, with Sector-wide themes such as technology disruptors, population longevity &amp; growth and asymmetric trends in commodity prices. The five Sectors have also become increasingly important for investors who seek portfolio diversification in times of increased economic uncertainty.

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI) generated a 1% total return, which was not far behind that of the MSCI AC Asia Pacific Index. However, the 1% gain is hardly the full story for the 30 STI stocks in the year thus far.  All five Global Industry Classification Standards (GICS®) Sectors without STI representation also generated gains over the first 10 months. These Sectors are also at junctures of opportunity and challenge, with Sector-wide themes such as technology disruptors, population longevity &amp; growth and asymmetric trends in commodity prices. The five Sectors have also become increasingly important for investors who seek portfolio diversification in times of increased economic uncertainty. 

Buoyant Returns Beyond the Benchmark in 2016 YTD

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Sino American Silicon Products / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a>  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT)</a> , <a href="https://www.smartkarma.com/entities/parade-technologies-ltd" target="_blank" data-smartkarma-citation="entities:6987:1" rel="noopener">Parade Technologies (4966 TT)</a> , <a href="https://www.smartkarma.com/entities/actron-technology-corp" target="_blank" data-smartkarma-citation="entities:4989:1" rel="noopener">Actron Technology (8255 TT)</a> and <a href="https://www.smartkarma.com/entities/advanced-wireless-semiconduc" target="_blank" data-smartkarma-citation="entities:16559:1" rel="noopener">Advanced Wireless Semiconduc (8086 TT)</a> with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 
<div class="content-highlight">
Besides the above-mentioned reasons, <a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a> remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 
</div>

Sino American Silicon Products (5483 TT)  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including Globalwafers (6488 TT) , Parade Technologies (4966 TT) , Actron Technology (8255 TT) and Advanced Wireless Semiconduc (8086 TT) with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 

Besides the above-mentioned reasons, Sino American Silicon Products (5483 TT) remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 


Sino American Silicon (5483): Entry to Globalwafers and Others

Hong Kong

CLP Holdings Limited provides vertically-integrated electricity supply in Hong Kong, conducts energy generation and retailing in Australia, and owns power generation assets in China, India, South-east Asia and Taiwan. The Company's power sources include coal, gas, nuclear and renewable energy.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

CLP Holdings (2 HK)

Global Markets Deteriorating...Except EM

With U.S. markets stumbling, the MSCI ACWI index is breaking down to new lows: defensive Sectors remain attractive. Relative to MSCI ACWI however,...

Vermilion Research

SoC Return Reset to 8% from 9.99%, and CLP's FVE Lowered to HKD 64

We lower our fair value estimate for CLP to HKD 64 per share from HKD 70, following the decision by the government to cut the Scheme of Control, or...

Morningstar, Inc.

TVB - Whitewash Musings

The despatch of Television Broadcasts Ltd (511 HK)'s Offer Document has been delayed thrice since TLG’s "bid" failed to materialise.The last two...

David Blennerhassett

Buoyant Returns Beyond the Benchmark in 2016 YTD

The first 10 months of 2016 brought its fair share of macroeconomic challenges to the region. During the 10 months, the Straits Times Index (STI)...

Singapore Exchange Ltd (SGX)

Sino American Silicon (5483): Entry to Globalwafers and Others

Sino American Silicon remains a smart way to gain exposure in Globalwafers (24x PER), compared to SAS (13x PER). The other factor is that...

Henry Soediarko

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)