European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The Additional Acceptance Period ended on 29 September. On 3 October, FEMSA announced the satisfaction of all conditions. On 5 October, FEMSA announced that its participation amounts to 96.87%.</li>
<li>Settlement will occur on 7 October. FEMSA intends to initiate a squeeze-out procedure and delist the Valora shares from trading on SIX Swiss Exchange.</li>
<li>The tender was good news for shareholders. My TP is CHF 252.2/share, therefore I believe the offer is fair and there was no counterbid. </li>
</ul>


The Additional Acceptance Period ended on 29 September. On 3 October, FEMSA announced the satisfaction of all conditions. On 5 October, FEMSA announced that its participation amounts to 96.87%.
Settlement will occur on 7 October. FEMSA intends to initiate a squeeze-out procedure and delist the Valora shares from trading on SIX Swiss Exchange.
The tender was good news for shareholders. My TP is CHF 252.2/share, therefore I believe the offer is fair and there was no counterbid. 


FEMSA/​Valora Holding: Offer Success and Squeeze-Out

<ul>
<li>Valora has agreed to a CHF 260/share cash offer (52% premium, 7.6x EV/Fwd EBITDA, 24.7x Fwd P/E) from FEMSA, which intends to use it as a platform for European expansion.</li>
<li>I consider the offer as fair (my DCF valuation of Valora is CHF 252.2/share, WACC 8.5%, 1.7% implied perpetuity growth rate).</li>
<li>Valora should benefit from FEMSA's know-how and added scale. A counterbid could be possible from the likes of Migros and Coop.</li>
</ul>


Valora has agreed to a CHF 260/share cash offer (52% premium, 7.6x EV/Fwd EBITDA, 24.7x Fwd P/E) from FEMSA, which intends to use it as a platform for European expansion.
I consider the offer as fair (my DCF valuation of Valora is CHF 252.2/share, WACC 8.5%, 1.7% implied perpetuity growth rate).
Valora should benefit from FEMSA's know-how and added scale. A counterbid could be possible from the likes of Migros and Coop.


FEMSA/Valora Holding: Fair Offer and Possible Counterbid

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over roughly 4 years and implemented in its current state for 2 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over roughly 4 years and implemented in its current state for 2 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.


Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Mexican Consumer Staples stocks are gaining traction with active EM investors.  Last month saw the net overweight reach a new high of +0.43% with a record 52.6% of funds overweight the iShares MSCI EM ETF.Despite this, absolute positioning in Mexican Consumer Staples is relatively low versus history.  This analysis looks at the potential for Mexican Consumer staples to run further, attracting more investors and becoming a greater allocation within active EM portfolios.

Mexican Consumer Staples stocks are gaining traction with active EM investors.  Last month saw the net overweight reach a new high of +0.43% with a record 52.6% of funds overweight the iShares MSCI EM ETF.Despite this, absolute positioning in Mexican Consumer Staples is relatively low versus history.  This analysis looks at the potential for Mexican Consumer staples to run further, attracting more investors and becoming a greater allocation within active EM portfolios.

Mexico Consumer Staples:  Overweight, Underowned, Strong Momentum

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

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Mexico

Fomento Economico Mexicano, S.A.B. de C.V. (FEMSA) is a Company that through its subsidiaries produces, distributes and markets non-alcoholic beverages throughout Latin America as part of the Coca-Cola system. The Company owns and operates convenience stores in Mexico and Colombia and holds a stake in Heineken.

Fomento Economico Mexica-Ubd (FEMSAUBD MM)

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

Fomento Economico Mexica-Ubd (FEMSAUBD MM)

FEMSA/Valora Holding: Offer Success and Squeeze-Out

On 5 October, FEMSA announced that it holds 96.87% of Valora. With all conditions satisfied and settlement scheduled for 7 October, the following...

Jesus Rodriguez Aguilar

FEMSA/Valora Holding: Fair Offer and Possible Counterbid

FEMSA intends to break into European convenience retail/food with a fair cash offer for Valora. A counterbid is not to be ruled out from the likes...

Jesus Rodriguez Aguilar

Screening for GEMs: May 2022

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

Mexico Consumer Staples: Overweight, Underowned, Strong Momentum

Mexican Consumer Staples stocks are gaining traction with active EM investors. Last month saw the net overweight reach a new high of +0.43% with a...

Steven Holden

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Our cautious outlook is reinforced by ongoing developments. Relative strength improvement for defensives (Utilities, Staples, Real Estate, Health...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

FEMSA/​Valora Holding: Offer Success and Squeeze-Out

On 5 October, FEMSA announced that it holds 96.87% of Valora. With all conditions satisfied and settlement scheduled for 7 October, the following...

Jesus Rodriguez Aguilar

FEMSA/Valora Holding: Fair Offer and Possible Counterbid

FEMSA intends to break into European convenience retail/food with a fair cash offer for Valora. A counterbid is not to be ruled out from the likes...

Jesus Rodriguez Aguilar

Screening for GEMs: May 2022

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

Mexico Consumer Staples: Overweight, Underowned, Strong Momentum

Mexican Consumer Staples stocks are gaining traction with active EM investors. Last month saw the net overweight reach a new high of +0.43% with a...

Steven Holden

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Our cautious outlook is reinforced by ongoing developments. Relative strength improvement for defensives (Utilities, Staples, Real Estate, Health...

Vermilion Research

FEMSA/Valora Holding: Offer Success and Squeeze-Out