Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<a href="https://www.smartkarma.com/entities/diageo-plc" target="_blank" rel="noopener" data-smartkarma-citation="entities:977:1">Diageo Plc (DGE LN)</a> reportedly has an eye on taking <a href="https://www.smartkarma.com/entities/united-spirits-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5146:1">United Spirits (UNSP IN)</a> private. Diageo already holds a stake of 55.94% in United Spirits and India contributes around a fifth of Diageo's global sales.India is the <a href="https://www.bbc.com/news/world-asia-india-52640266" target="_blank" rel="noopener">ninth largest consumer</a> of all alcohol by volume, and the second largest consumer of spirits behind China. India also consumes more whisky than any other country in the world, making it a very attractive market to <a href="https://www.smartkarma.com/entities/diageo-plc" target="_blank" rel="noopener" data-smartkarma-citation="entities:977:1">Diageo Plc (DGE LN)</a>.Since it first purchased a stake in <a href="https://www.smartkarma.com/entities/united-spirits-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5146:1">United Spirits (UNSP IN)</a> in 2012, Diageo has kept increasing its shareholding. It last increased its holding in February this year, purchasing 0.7% of the company on the NSE paying INR 693.25 per share. With the stock trading at just over INR 600 a share currently and at its lowest forward PB in a few years, <a href="https://www.smartkarma.com/entities/diageo-plc" target="_blank" rel="noopener" data-smartkarma-citation="entities:977:1">Diageo Plc (DGE LN)</a> could use the opportunity to take the company private.

Diageo Plc (DGE LN) reportedly has an eye on taking United Spirits (UNSP IN) private. Diageo already holds a stake of 55.94% in United Spirits and India contributes around a fifth of Diageo's global sales.India is the ninth largest consumer of all alcohol by volume, and the second largest consumer of spirits behind China. India also consumes more whisky than any other country in the world, making it a very attractive market to Diageo Plc (DGE LN).Since it first purchased a stake in United Spirits (UNSP IN) in 2012, Diageo has kept increasing its shareholding. It last increased its holding in February this year, purchasing 0.7% of the company on the NSE paying INR 693.25 per share. With the stock trading at just over INR 600 a share currently and at its lowest forward PB in a few years, Diageo Plc (DGE LN) could use the opportunity to take the company private.

Diageo Privatising United Spirits - Worth a Shot

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

We remain cautious as the number of bearish-leaning developments continue to pile up. As a result we continue to believe global equities are vulnerable to a breakdown. We recap important technical levels across markets and highlight Actionable Themes within Services, Consumer Staples, and Health Care. We also highlight attractive set ups in H&amp;M Hennes &amp; Mauritz AB Class B (HM.B-SE).

We remain cautious as the number of bearish-leaning developments continue to pile up. As a result we continue to believe global equities are vulnerable to a breakdown. We recap important technical levels across markets and highlight Actionable Themes within Services, Consumer Staples, and Health Care. We also highlight attractive set ups in H&amp;M Hennes &amp; Mauritz AB Class B (HM.B-SE).

Global Equity Strategy: Bearish-Leaning Developments Continue; Europe/UK Holding Above Support.

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

According to the global Industry data published this week <a href="https://www.smartkarma.com/entities/radico-khaitan-ltd" target="_blank" data-smartkarma-citation="entities:20842:1">Radico Khaitan (RDCK IN)</a>, an India based popular alcoholic beverages maker, owns 2 of the top 12 fastest growing spirits brands globally in 2018. However, the stock is down 30% YTD trading close to its 52-week low as the spectre of regional alcohol ban rears its head in two states in India, including Andhra Pradesh, one of the bigger markets for alcoholic beverages in the country. Radico Khaitan had reported strong growth in sales, margins and profits for the quarter and year ended March 31st 2019. The proposed liquor ban, when implemented, will hurt Radico Khaitan's revenue growth, operating margins and net profit (expect full year impact in FY2021). However, based on our earnings/valuations analysis, the YTD stock slide seems to fully factor in the potential earnings downside. Any further stock decline could be opportunities for investors looking for favourable entry points. Regulatory issues - taxes/regional bans - will continue to be the key sector risks.In the note below, we look at (1) likely earnings scenario for <a href="https://www.smartkarma.com/entities/radico-khaitan-ltd" target="_blank" data-smartkarma-citation="entities:20842:1">Radico Khaitan (RDCK IN)</a> after factoring in possible volume/revenue impact from expected state alcohol ban and (2) implied valuations at the revised earnings levels and potential stock upside (3) Radico Khaitan's earnings and operational track record. We include few data points on India spirits market fundamentals and also present the list of top spirits brands for 2018, ranked by absolute volume growth.

According to the global Industry data published this week Radico Khaitan (RDCK IN), an India based popular alcoholic beverages maker, owns 2 of the top 12 fastest growing spirits brands globally in 2018. However, the stock is down 30% YTD trading close to its 52-week low as the spectre of regional alcohol ban rears its head in two states in India, including Andhra Pradesh, one of the bigger markets for alcoholic beverages in the country. Radico Khaitan had reported strong growth in sales, margins and profits for the quarter and year ended March 31st 2019. The proposed liquor ban, when implemented, will hurt Radico Khaitan's revenue growth, operating margins and net profit (expect full year impact in FY2021). However, based on our earnings/valuations analysis, the YTD stock slide seems to fully factor in the potential earnings downside. Any further stock decline could be opportunities for investors looking for favourable entry points. Regulatory issues - taxes/regional bans - will continue to be the key sector risks.In the note below, we look at (1) likely earnings scenario for Radico Khaitan (RDCK IN) after factoring in possible volume/revenue impact from expected state alcohol ban and (2) implied valuations at the revised earnings levels and potential stock upside (3) Radico Khaitan's earnings and operational track record. We include few data points on India spirits market fundamentals and also present the list of top spirits brands for 2018, ranked by absolute volume growth.

Fishing in Muddy Waters: Radico Khaitan Hits a Low as India Spirits Stumbles. Look for Value

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 stockmarket has enjoyed a buoyant first quarter keeping track with other developed markets. This might appear somewhat surprising given political turmoil and the existential risk posed by Brexit but it seems that investors always anticipated that Parliament would veto the most damaging "No-deal" option. In this regard investors have been more far-sighted than right-wing Conservative politicians.So where to now for FTSE100 ? The index is back to the level of early 18Q4 which seems appropriate given the anticipated economic downturn recession failed to materialise. The old adage "Sell in May and go away" comes to mind. As strategy this has worked quite well. Over the 25 years the market has been lower at the at the end of the second quarter than at the beginning 42%  of the time, producing an average return of minus 0.4%.In terms of individual companies, Tesco (which we had in the long portfolio) is amongst the top ten performers year-to-date, and Centrica (in the short portfolio) is the second worst.

The UK stockmarket has enjoyed a buoyant first quarter keeping track with other developed markets. This might appear somewhat surprising given political turmoil and the existential risk posed by Brexit but it seems that investors always anticipated that Parliament would veto the most damaging "No-deal" option. In this regard investors have been more far-sighted than right-wing Conservative politicians.So where to now for FTSE100 ? The index is back to the level of early 18Q4 which seems appropriate given the anticipated economic downturn recession failed to materialise. The old adage "Sell in May and go away" comes to mind. As strategy this has worked quite well. Over the 25 years the market has been lower at the at the end of the second quarter than at the beginning 42%  of the time, producing an average return of minus 0.4%.In terms of individual companies, Tesco (which we had in the long portfolio) is amongst the top ten performers year-to-date, and Centrica (in the short portfolio) is the second worst.

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted.
The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.
Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  
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With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted.
The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.
Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  


S&amp;P Capital IQ


United Kingdom

Diageo plc produces, distills and markets alcoholic beverages.  The Company offers a wide range of branded beverages, including vodkas, whiskeys, tequilas, gins, and beer.

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Diageo Plc (DGE LN)

Diageo Privatising United Spirits - Worth a Shot

Diageo Plc (DGE LN) reportedly has an eye on taking United Spirits (UNSP IN) private. Diageo already holds a stake of 55.94% in United Spirits and...

Brian Freitas

Global Equity Strategy: Bearish-Leaning Developments Continue; Europe/UK Holding Above Support.

We remain cautious as the number of bearish-leaning developments continue to pile up. As a result we continue to believe global equities are...

Vermilion Research

Fishing in Muddy Waters: Radico Khaitan Hits a Low as India Spirits Stumbles. Look for Value

According to the global Industry data published this week Radico Khaitan (RDCK IN), an India based popular alcoholic beverages maker, owns 2 of the...

Devi Subhakesan

FTSE 100 Long/Short: No 2 No Deal

The UK stockmarket has enjoyed a buoyant first quarter keeping track with other developed markets. This might appear somewhat surprising given...

Boost Research

FTSE 100 Long/Short: Beginner's Luck

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be...

Boost Research

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