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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.</li>
<li>On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.</li>
<li>If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.</li>
</ul>


Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.


Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Scheme Document for <a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. </li>
<li>
<a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. </li>
<li>The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.</li>
</ul>


The Scheme Document for Cp Pokphand (43 HK) (CPP) has been dispatched. The Scheme Meeting will take place on the 15 December. 

CP FOODS (CPF TB) and Itochu Corp (8001 JP) with 49.74% and 25% of shares out respectively are offering HK$1.15/share for CPP, a leading agri-food conglomerate in China and Vietnam. 
The Independent Financial Adviser (Ballas Capital) considers the Scheme to be fair and reasonable. Assuming the Scheme gets up, payment is the 25 January, on or before.


C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

Travis Lundy

The shares of <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in <a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud</a>. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

The shares of WH Group (288 HK) to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Shandong Fengxiang / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a> (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong IPO.<div>I had looked at the company background in my previous note,<a href="https://www.smartkarma.com/insights/shandong-fengxiang-ipo-looks-cheap-but-is-at-peak-margins" target="_blank" rel="noopener"> Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins</a>.</div><div>In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. </div>

Shandong Fengxiang (9977 HK) (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong IPO.I had looked at the company background in my previous note, Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins.In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. 

Shandong Fengxiang IPO Trading - Lack of Over-Allocation Won't Help Post Deal Performance

<a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>  Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking to raise upto US$220m in its Hong Kong listing. SF has a market share of 3.1% in 2019, by volume. SF is also the largest white-feathered broiler meat exporter in the PRC in terms of revenue and volume with a market share of 8.6% and 10.4% in 2018.The company caters mostly to the B2B segment with some of the largest quick-service restaurant chains (Yum China, and McDonald's) as its customers. It has long term relationships with some stretching for more than 15 years.Earnings have grown rapidly over the reporting period of FY16-19, revenue grew at 18.6% CAGR while PAT (without bio gains) grew at 94% CAGR or was up 7.3x, although the growth hasn’t been even.Earnings growth has mostly been driven by the industry-wide price increase, as processed meat is the only segment that has consistently grown its volumes. The industry overall has been shrinking since 2015 due to supply issues, as per the industry report. This is expected to reverse in 2020, although the forecasts appear rosy. There are also related party issues with SF entering into many transactions with related entities.

Shandong Fengxiang (9977 HK)  Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking to raise upto US$220m in its Hong Kong listing. SF has a market share of 3.1% in 2019, by volume. SF is also the largest white-feathered broiler meat exporter in the PRC in terms of revenue and volume with a market share of 8.6% and 10.4% in 2018.The company caters mostly to the B2B segment with some of the largest quick-service restaurant chains (Yum China, and McDonald's) as its customers. It has long term relationships with some stretching for more than 15 years.Earnings have grown rapidly over the reporting period of FY16-19, revenue grew at 18.6% CAGR while PAT (without bio gains) grew at 94% CAGR or was up 7.3x, although the growth hasn’t been even.Earnings growth has mostly been driven by the industry-wide price increase, as processed meat is the only segment that has consistently grown its volumes. The industry overall has been shrinking since 2015 due to supply issues, as per the industry report. This is expected to reverse in 2020, although the forecasts appear rosy. There are also related party issues with SF entering into many transactions with related entities.

Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins

China

COFCO Joycome Foods Limited engages in animal meat production. The Company produces, processes, distributes, and sells fresh pork, pork products, and animal feeds. COFCO Joycome Foods also operates and manages slaughterhouse throughout China.

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COFCO Joycome Foods (1610 HK)

Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

We're starting to see signs that inflation is peaking, as commodity prices have pulled back substantially or are breaking, and the Energy $XLE and...

Vermilion Research

C.P. Pokphand (43 HK): Scheme Doc Out. Meeting on 15 December

This still looks a pretty clean deal. I'd be paying up to and around $1.12/share which is ~3.6%/15% gross/annualised spread.

David Blennerhassett

WH Group Post-Tender Outlook

Buyback Offer shares are returned. Now we look forward. Of course, we did before in assuming participation rates. The stock is cheap on accretion...

Travis Lundy

Shandong Fengxiang IPO Trading - Lack of Over-Allocation Won't Help Post Deal Performance

Shandong Fengxiang (9977 HK) (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, raised US$150m in its Hong Kong...

Sumeet Singh

Shandong Fengxiang IPO - Looks Cheap but Is at Peak Margins

Shandong Fengxiang (9977 HK) Shandong Fengxian (SF), the second-largest fully integrated white-feathered broiler producer in the PRC, is looking...

Sumeet Singh

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