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

Lvmh Moet Hennessy Louis Vuitton / Technical Analysis

<ul>
<li>Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.</li>
<li>Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. </li>
<li>We highlight several buy opportunities within global Technology and Consumer Discretionary.</li>
</ul>


Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.
Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. 
We highlight several buy opportunities within global Technology and Consumer Discretionary.


Add To Global Technology and Consumer Discretionary

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

On 21 June, a Dutch arbitration court ruled that <a href="https://www.smartkarma.com/entities/grandvision-nv" target="_blank" data-smartkarma-citation="entities:21114:1" rel="noopener">GrandVision NV (GVNV NA)</a> had breached its obligations under a €7,210 mn (€28.42/share) takeover offer from French-Italian eyewear giant <a href="https://www.smartkarma.com/entities/essilorluxottica-sa-369cd59a-eccd-455d-a37d-29ef3c41a705" target="_blank" data-smartkarma-citation="entities:21443:1" rel="noopener">EssilorLuxottica (EL FP)</a> (EssiLux) agreed in 2019. The ruling means EssiLux is no longer obliged to purchase GrandVision, can walk away without paying a €400 mn break-up fee and even could claim compensation from GrandVision.
This has happened when all competition clearances and regulatory approvals required to complete the transaction have already been obtained. Financing of the deal is already raised.
I regard the rationale for acquiring GrandVision as still compelling and unaffected by the court ruling. The deal still has significant strategic value, as it is set to rebalance EssiLux's channel mix of retail and wholesale in Europe and enlarge its geographical diversification. Furthermore, Capital IQ consensus points to a recovery in sales and increasing EBITDA margins of GrandVision.
I believe that EssiLux's arbitration victory is an opportunity to renegotiate with HAL to lower the agreed price. It is not dissimilar to LVMH renegotiating terms with Tiffany. There are still high chances that the deal completes, at a lower price.
The share price of GrandVision has fallen by c. 11%, so this seems to indicate that interlopers are unlikely to arise. An excuse for lowering the agreed price would be to compensate for the effects of the pandemic.
My TP is €27/share, a 5% reduction to the agreed price (savings of €360 mn for EssiLux), which I cross check against a multiples based implied median valuation of €29.72/share and a mean TP of €27.44/share of Capital IQ consensus.
EssiLux should pick up a bargain. At my TP, upside is 7%. Recommendation is long GVNV NA.

On 21 June, a Dutch arbitration court ruled that GrandVision NV (GVNV NA) had breached its obligations under a €7,210 mn (€28.42/share) takeover offer from French-Italian eyewear giant EssilorLuxottica (EL FP) (EssiLux) agreed in 2019. The ruling means EssiLux is no longer obliged to purchase GrandVision, can walk away without paying a €400 mn break-up fee and even could claim compensation from GrandVision.
This has happened when all competition clearances and regulatory approvals required to complete the transaction have already been obtained. Financing of the deal is already raised.
I regard the rationale for acquiring GrandVision as still compelling and unaffected by the court ruling. The deal still has significant strategic value, as it is set to rebalance EssiLux's channel mix of retail and wholesale in Europe and enlarge its geographical diversification. Furthermore, Capital IQ consensus points to a recovery in sales and increasing EBITDA margins of GrandVision.
I believe that EssiLux's arbitration victory is an opportunity to renegotiate with HAL to lower the agreed price. It is not dissimilar to LVMH renegotiating terms with Tiffany. There are still high chances that the deal completes, at a lower price.
The share price of GrandVision has fallen by c. 11%, so this seems to indicate that interlopers are unlikely to arise. An excuse for lowering the agreed price would be to compensate for the effects of the pandemic.
My TP is €27/share, a 5% reduction to the agreed price (savings of €360 mn for EssiLux), which I cross check against a multiples based implied median valuation of €29.72/share and a mean TP of €27.44/share of Capital IQ consensus.
EssiLux should pick up a bargain. At my TP, upside is 7%. Recommendation is long GVNV NA.

Likely Renegotiation in EssiLux/GrandVision

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.

On 31 July 2019, <a href="https://www.smartkarma.com/entities/essilor-international" target="_blank" data-smartkarma-citation="entities:21443:1" rel="noopener">Essilor International (EI FP)</a> announced an agreement to acquire HAL’s 76.72% stake in <a href="https://www.smartkarma.com/entities/grandvision-nv" target="_blank" data-smartkarma-citation="entities:21114:1" rel="noopener">GrandVision NV (GVNV NA)</a> for €28 per share, to be increased by 1.5% to €28.42 if the closing does not occur within 12 months from the announcement date i.e. 31 July 2020. After the transaction has closed, EssilorLuxottica will launch a mandatory cash public offer at the price per share paid to HAL. <div class="content-highlight">The spread averaged 2.0% from 31 July 2019 to 13 March 2020 but increased to a high of 57.7% on 18 March. The spread exploded due to a combination of high market volatility and concerns that the transaction will not meet completion conditions. Overall, we believe that the transaction risk is low. The gross spread currently sits at 17%. The annualised spread is 55% for 31 July 2020 completion and 25% for year-end completion.   </div>

On 31 July 2019, Essilor International (EI FP) announced an agreement to acquire HAL’s 76.72% stake in GrandVision NV (GVNV NA) for €28 per share, to be increased by 1.5% to €28.42 if the closing does not occur within 12 months from the announcement date i.e. 31 July 2020. After the transaction has closed, EssilorLuxottica will launch a mandatory cash public offer at the price per share paid to HAL. The spread averaged 2.0% from 31 July 2019 to 13 March 2020 but increased to a high of 57.7% on 18 March. The spread exploded due to a combination of high market volatility and concerns that the transaction will not meet completion conditions. Overall, we believe that the transaction risk is low. The gross spread currently sits at 17%. The annualised spread is 55% for 31 July 2020 completion and 25% for year-end completion.   

EssilorLuxottica/GrandVision Attractive Spread

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective.  We provide a recap and outlook for global equity markets and highlight individual opportunities across various markets within the Health Care, Communications and Transportation sectors.

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective.  We provide a recap and outlook for global equity markets and highlight individual opportunities across various markets within the Health Care, Communications and Transportation sectors.

Global Strategy: Carnage Continuation Amid Turkey Turmoil and US Dollar Breakout

Today's report puts a spotlight on the Health Care Sector, which is assuming a global leadership role vs. other Sectors. We also focus on the Communications Sector as we are seeing steady relative strength ranking (RSR) improvements over the last couple of months. At the Group level, we highlight select smid-cap Casinos &amp; Gaming stocks. Finally, India’s S&amp;P BSE SENSEX is breaking out to new all-time highs as RS bullishly inflects, we highlight actionable stocks.

Today's report puts a spotlight on the Health Care Sector, which is assuming a global leadership role vs. other Sectors. We also focus on the Communications Sector as we are seeing steady relative strength ranking (RSR) improvements over the last couple of months. At the Group level, we highlight select smid-cap Casinos &amp; Gaming stocks. Finally, India’s S&amp;P BSE SENSEX is breaking out to new all-time highs as RS bullishly inflects, we highlight actionable stocks.

Global Strategy: Health Care Outperforming - Overweight; India Breaking Out -Add Exposure

France

EssilorLuxottica manufactures eyewear. The Company offers sun glasses, lenses, and other eye care products. EssilorLuxottica serves customers worldwide.

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EssilorLuxottica (EL FP)

Add To Global Technology and Consumer Discretionary

Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the ACWI Discretionary Sector is on the cusp of a...

Vermilion Research

Likely Renegotiation in EssiLux/GrandVision

EssiLux's arbitration victory opens the opportunity to renegotiate the price, with no interlopers in sight, a 5% reduction is likely. My TP is €27...

Jesus Rodriguez Aguilar

EssilorLuxottica/GrandVision Attractive Spread

On 31 July 2019, Essilor International (EI FP) announced an agreement to acquire HAL’s 76.72% stake in GrandVision NV (GVNV NA) for €28 per share,...

Arun George

Global Strategy: Carnage Continuation Amid Turkey Turmoil and US Dollar Breakout

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective. ...

Vermilion Research

Global Strategy: Health Care Outperforming - Overweight; India Breaking Out -Add Exposure

Today's report puts a spotlight on the Health Care Sector, which is assuming a global leadership role vs. other Sectors. We also focus on...

Vermilion Research

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