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 ex US ETF / Technical Analysis

<ul>
<li>Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.</li>
<li>Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).</li>
<li>There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they <em>are</em> in downtrends, a major problem longer-term.</li>
</ul>


Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.
Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they are in downtrends, a major problem longer-term.


MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<ul>
<li>The Holdco trade involving <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>, which we suggested last year has generated over 33% during the last 12 months against Topix’s 3.8% and Nikkei’s 2.6%.</li>
<li>We expect additional gains from this Holdco trade mostly alongside improvements in the core-business EBITDA expectations.</li>
<li>In addition, Kirin is looking outright positive with multiple catalysts assisting Kirin to turn around price performance.</li>
</ul>


The Holdco trade involving Kirin Holdings (2503 JP), which we suggested last year has generated over 33% during the last 12 months against Topix’s 3.8% and Nikkei’s 2.6%.
We expect additional gains from this Holdco trade mostly alongside improvements in the core-business EBITDA expectations.
In addition, Kirin is looking outright positive with multiple catalysts assisting Kirin to turn around price performance.


Kirin: Holdco Trade Has More Room to Run, Also Outright Attractive

Equity Bottom-Up

<ul>
<li>We last wrote on this relatively small Japanese cosmetics company in September 2021 suggesting that it could be worth keeping an eye on given its cheaper valuation compared to peers.</li>
<li>
<a href="https://www.smartkarma.com/entities/premier-anti-aging-co-ltd" target="_blank" data-smartkarma-citation="entities:34292:1" rel="noopener">Premier Anti-Aging (4934 JP)</a> shares are down 80% from the peak, mostly because it was sold-off alongside the low quality names in Mothers.</li>
<li>It seems early to turn outright bullish on Premier Anti-Aging yet. However, if you are short other unprofitable names in Mothers, we think Premier Anti-Aging is a sensible long hedge.</li>
</ul>


We last wrote on this relatively small Japanese cosmetics company in September 2021 suggesting that it could be worth keeping an eye on given its cheaper valuation compared to peers.

Premier Anti-Aging (4934 JP) shares are down 80% from the peak, mostly because it was sold-off alongside the low quality names in Mothers.
It seems early to turn outright bullish on Premier Anti-Aging yet. However, if you are short other unprofitable names in Mothers, we think Premier Anti-Aging is a sensible long hedge.


Premier Anti-Aging Company:  Getting to an Interesting Level

<ul>
<li>With Omicron under control, Japan is expected to relax home quarantine requirements for foreign travellers some time or the other.</li>
<li>Meanwhile, Google Mobility data hints that domestic customers are starting to head back to places like shopping centres, suggesting an improvement in demand conditions.</li>
<li>Based on valuation and the price performance trend, long time underperformer <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis Holdings (4927 JP)</a> seems like the best option to capitalise on the reopening of Japan to foreign tourists.</li>
</ul>


With Omicron under control, Japan is expected to relax home quarantine requirements for foreign travellers some time or the other.
Meanwhile, Google Mobility data hints that domestic customers are starting to head back to places like shopping centres, suggesting an improvement in demand conditions.
Based on valuation and the price performance trend, long time underperformer Pola Orbis Holdings (4927 JP) seems like the best option to capitalise on the reopening of Japan to foreign tourists.


Pola Orbis: Our Preferred Choice Leading up The Reopening of Japan to Foreign Tourists

<ul>
<li>With life getting back to the usual ways following changes due to COVID-19, the Japanese cosmetics sector was expected to experience an uplift in earnings, mainly through inbound demand.</li>
<li>However, the extension of China’s common prosperity crackdowns to the live-streaming e-commerce business, could more than offset a possible recovery in inbound demand.</li>
<li>Thus, we fear that there is additional downside risk to Japanese cosmetics multiples in the short term.</li>
</ul>


With life getting back to the usual ways following changes due to COVID-19, the Japanese cosmetics sector was expected to experience an uplift in earnings, mainly through inbound demand.
However, the extension of China’s common prosperity crackdowns to the live-streaming e-commerce business, could more than offset a possible recovery in inbound demand.
Thus, we fear that there is additional downside risk to Japanese cosmetics multiples in the short term.


Crackdown on Live-Streaming E-Commerce Could Derail The Recovery of Japanese Cosmetics

Japan

POLA ORBIS HOLDINGS INC. develops, manufactures and markets cosmetic products, centering in skincare  products. Under its multi-brand strategy, the Company holds nine cosmetic brands including POLA, prestige skincare brand, ORBIS, oil-free skincare brand, H2O PLUS and Jurlique.

Rizap Group Inc provides low calorie foods including soy milk cookies, diet drinks, and supplements.  The Company sells its products through mail order.

KOBAYASHI PHARMACEUTICAL CO., LTD. manufactures and wholesales pharmaceuticals and medical equipment.  The Company also develops and manufactures fragrances, deodorant, sanitary products, and ointment for stiff shoulders, as well as exports to Southeast Asia and the US.

Noevir Holdings Co., Ltd. manufactures and sells a variety of cosmetic products. The Company's products include skin care and make-up.  Noevir also manufactures and sells medicines, nutritional supplements and apparel.

Milbon Co., Ltd. manufactures hair care products for beauty salons.  The Company produces chemicals for permanents, hair coloring, shampoos, rinses, and hair growth stimulant products.

euglena Co., Ltd. develops and manufactures euglena based products. The Company uses the unique growing and nutritional properties to produce functional food tablets, jelly, beverages, cookies, noodles, and cosmetics. euglena grows in high carbon dioxide environments which enables it to be used for environmental and outer space applications as well.

KOSE Corporation manufactures, retails, and exports cosmetics including make up, skin care, and hair care products.  The Company sells its products in Hong Kong, China, Singapore, and Malaysia.

MANDOM CORPORATION manufactures and markets a variety of cosmetic products for men and women.  The Company's products include hair care and skin care cosmetics.

COTA CO., LTD. manufactures and sells hair care products.  The Company offers an extensive line of perm, coloring, styling, and treatment products.

YA-MAN LTD. is a manufacturer of home facial equipment, and also sells its facial massager, cosmetics and laundry.

LG H&H Co., Ltd. manufactures and distributes cosmetics. The Company produces whoo, o hui, sum 37, basic cosmetics, color cosmetics, and other related products. LG H&H also produces toothpaste, soap, detergents, healthy, personal care, and refreshing products.

AMOREPACIFIC Group is an investment holding company. The Company, through its subsidiaries, produce cosmetics and toiletries.

Edgewell Personal Care Co., manufactures and markets a diversified range of personal care  products in the wet shave, skin care, feminine care and infant care categories.  The Companies products include shaving systems and disposable razors, feminine care products, sun care products, infant feeding, gloves and moist wipes.

Amorepacific Corporation develops, manufactures, and exports skin care, make-up, and fragrance products. The Company also produces and markets personal care and health-related products, such as shampoos, soaps, toothpastes, and health teas.

Shanghai Flyco Electrical Appliance Co., Ltd. develops, manufactures and sells personal care appliances. Main products include electric shavers and hairdryers.

Shanghai Flyco Electrical Appl (603868 CH)

Shanghai Jahwa United Co., Ltd. develops, manufactures and wholesales skin care and hair care products, cosmetics, perfumes, detergents, and other household chemical products.  The Company also provides technical and food services.

PT Industri Jamu Dan Farmasi Sido Muncul Tbk manufactures and produces herbal products. The Company's products consist of medicinal herbs, energy drinks, sweets and other beverages.

Blackmores Limited manufactures and markets vitamin, herbal, mineral supplements and natural skin and hair treatment products in Australia and New Zealand. These products are supplied to the over the counter retail market and to health care professionals. The Company also has a line of natural beauty and aromatherapy products and its products are distributed in South East Asia.

Cosmax, Inc. is a cosmetics manufacturer. The Company develops and produces a variety of cosmetics for men and women, such as basic and special skin care, makeup, hair care, and other beauty products. Cosmax manufactures its products on original equipment manufacturing (OEM) basis.

Herbalife Ltd. is a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products. The Company distributes and sells its products through a network of independent distributors, using the direct selling channel.

FANCL CORPORATION produces and sells additive-free skin care cosmetics for both women and men.  The Company's products include cleansing creams, hair care goods such as shampoos and conditioners, and facial make up products.  Fancl also makes and distributes dietary supplements including royal jelly and various tablets with extracted essence from mushrooms, garlic, ginseng, and soy beans.

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Fancl Corp (4921 JP)

MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Bounce potential given $ACWX $EFA testing downtrend channel supports, but it would likely be a short-term trading opportunity due to the fact that...

Vermilion Research

Kirin: Holdco Trade Has More Room to Run, Also Outright Attractive

Almost 12 months down the line, our Holdco trade involving Kirin has given us a return of around 33.3% against Topix’s 3.8% and Nikkei’s 2.6%...

Oshadhi Kumarasiri

Premier Anti-Aging Company: Getting to an Interesting Level

Premier Anti-Aging’s current multiple is around 27% below the sector’s cyclical low multiple suggesting that there could be significant upside...

Oshadhi Kumarasiri

Pola Orbis: Our Preferred Choice Leading up The Reopening of Japan to Foreign Tourists

Based on valuation and the price performance trend, long time underperformer Pola Orbis seems like the best option to capitalise on the reopening...

Oshadhi Kumarasiri

Crackdown on Live-Streaming E-Commerce Could Derail The Recovery of Japanese Cosmetics

Valuation multiples of Japanese cosmetics makers more than doubled during the last 6-7 years alongside the growth driven by the China expansion and...

Oshadhi Kumarasiri

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