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

<ul>
<li>Key supports that we highlighted in last week's Compass (Sept. 7) held strong, including 3900-3910 on the SPX, $293 on the Nasdaq 100 (QQQ), $177-178 on the Russell 2000 (IWM).</li>
<li>We got the bounce where bulls needed to hold, but these levels could be tested again following this morning's hotter-than-expected CPI report.</li>
<li>As long as the aforementioned supports continue to hold, we continue to believe the lows are likely in for this bear market -- something we noted throughout late-July and August.</li>
</ul>


Key supports that we highlighted in last week's Compass (Sept. 7) held strong, including 3900-3910 on the SPX, $293 on the Nasdaq 100 (QQQ), $177-178 on the Russell 2000 (IWM).
We got the bounce where bulls needed to hold, but these levels could be tested again following this morning's hotter-than-expected CPI report.
As long as the aforementioned supports continue to hold, we continue to believe the lows are likely in for this bear market -- something we noted throughout late-July and August.


Supports to Be Tested Again Following CPI? Stick With Solar Stocks, Buying Manufacturing Names

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hollysys Automation Technologies / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation (HOLI US)</a> said in January it would suspend further evaluation of all unsolicited buyout proposals. Two proposals have reportedly since emerged.</li>
<li>According to Bloomberg, the latest tilt is from Beijing Infrastructure, the state-owned operator of Beijing's railway and subway.</li>
<li>Separately, Hollysys reported FY21 net income of US$44.3mn, a decrease of 14.6% to FY20.</li>
</ul>



Hollysys Automation (HOLI US) said in January it would suspend further evaluation of all unsolicited buyout proposals. Two proposals have reportedly since emerged.
According to Bloomberg, the latest tilt is from Beijing Infrastructure, the state-owned operator of Beijing's railway and subway.
Separately, Hollysys reported FY21 net income of US$44.3mn, a decrease of 14.6% to FY20.


Hollysys (HOLI US): Potential Suitors Didn't Get The Memo

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a> has <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=116388898&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2022-01-24&amp;CK=1357450" target="_blank" rel="noopener">announced</a> it will suspend further evaluation of all unsolicited buyout proposals that the company has received.</li>
<li>Concurrently, a new buyer consortium has pitched a non-binding Offer of US$25/share. There is no SEC filing on this proposal nor does it appear on HOLI's website. </li>
<li>Shares closed ~13% down on the suspension news. Presumably, the evaluation cessation encompasses the most recent proposal.</li>
</ul>



Hollysys Automation Technology (HOLI US) has announced it will suspend further evaluation of all unsolicited buyout proposals that the company has received.
Concurrently, a new buyer consortium has pitched a non-binding Offer of US$25/share. There is no SEC filing on this proposal nor does it appear on HOLI's website. 
Shares closed ~13% down on the suspension news. Presumably, the evaluation cessation encompasses the most recent proposal.


Hollysys (HOLI US) Suspends Proposal Evaluations As Fourth Bid Emerges

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a> has officially <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=116254323&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-11-15&amp;CK=1357450" target="_blank" rel="noopener">acknowledged</a> a non-binding Offer from <a href="https://www.smartkarma.com/entities/zhejiang-longsheng-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1751:1" rel="noopener">Zhejiang Longsheng Group Co., (600352 CH)</a> and Loyal Valley Innovation Capital at US$24/share. </li>
<li>The replacement of Hollysys auditor (EY) and its current inability to file its annual report remain ongoing.</li>
<li>Such accounting-related issues will constrain the timing, negotiation, and entry into of any definitive acquisition agreement.</li>
</ul>



Hollysys Automation Technology (HOLI US) has officially acknowledged a non-binding Offer from Zhejiang Longsheng Group Co., (600352 CH) and Loyal Valley Innovation Capital at US$24/share. 
The replacement of Hollysys auditor (EY) and its current inability to file its annual report remain ongoing.
Such accounting-related issues will constrain the timing, negotiation, and entry into of any definitive acquisition agreement.


Hollysys (HOLI US): The Subtle Third Offer

iClick Interactive Asia Group / Event-Driven

In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the <a href="https://en.wikipedia.org/wiki/Holding_Foreign_Companies_Accountable_Act" target="_blank" rel="noopener">Holding Foreign Companies Accountable Act</a> last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.
More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for <a href="https://www.smartkarma.com/entities/iclick-interactive-asia-group-limited" target="_blank" data-smartkarma-citation="entities:27314:1" rel="noopener">iClick Interactive Asia Group (ICLK US)</a> a little unusual.
iClick <a href="https://ir.i-click.com/2021-09-24-iClick-Interactive-Asia-Group-Limited-Announces-Receipt-of-a-Preliminary-Non-Binding-Indicative-Proposal-to-Acquire-the-Company" target="_blank" rel="noopener">announced</a> on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.
That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.
Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.
Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.
In addition, <a href="https://www.smartkarma.com/entities/baozun" target="_blank" data-smartkarma-citation="entities:29712:1" rel="noopener">Baozun (9991 HK)</a> controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. 
But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, to make a counteroffer.
More below the fold.

In recent years,  it has become common practice for Chinese "tech" companies listed in the US to be privatised, on the expectation of being relisted on the Mainland (where often higher multiples are assigned) or Hong Kong. Following the passing of the Holding Foreign Companies Accountable Act last year, there is an added impetus to take these companies private. Or at the very least, seek a dual listing in Hong Kong.
More often than not, these takeovers are initiated by the controlling shareholders. Which makes this latest non-binding proposal for iClick Interactive Asia Group (ICLK US) a little unusual.
iClick announced on the 24 September it had received a preliminary indicative proposal from PAG Pegasus Fund and Oasis Management to acquire all of its outstanding shares for US$6.75 per ADS, in cash.
That's a 19% premium to last close, yet 63% below its all-time high close of US$18.30 in February last year, and 16% below its $8/share IPO price in December 2018.
Should a firm Offer unfold, this long-form merger would require two-thirds majority approval from all shareholders.
Sammy Hsieh, the chairman of the board of directors and co-founder, Jian Tang, iClick's CEO, and co-founder, collectively own 4,385,078 Class B ordinary shares, which due to their super-voting rights, is equivalent to ~62% of the voting power. This proposal is a non-starter without the support of either Hsieh or Tang.
In addition, Baozun (9991 HK) controls a further 10% of the voting power. Should all three side with the buyer consortium, this deal is done. 
But I doubt this will be the outcome. A more likely scenario is the consortium's low-balled Offer is a means to triggering a response from a key player, such as Tencent (700 HK), to make a counteroffer.
More below the fold.

IClick(ICLK US): PAG & Oasis Shake The Trees

United States

Hollysys Automation Technologies Ltd. manufactures automation and control systems.  The Company produces process, industrial, rail and subway, and nuclear power plant automation equipment.

Hollysys Automation Technologies (HOLI US)

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Hollysys Automation Technologies (HOLI US)

Supports to Be Tested Again Following CPI? Stick With Solar Stocks, Buying Manufacturing Names

Supports discussed in recent weeks have held, including 3900 on $SPX, $293 on $QQQ, and $177-178 on $IWM. These levels could be tested again...

Vermilion Research

Hollysys (HOLI US): Potential Suitors Didn't Get The Memo

Hollysys is good value here, if you have the patience. Poor transparency of indicative proposals, the myriad of Offers that appear to have fallen...

David Blennerhassett

Hollysys (HOLI US) Suspends Proposal Evaluations As Fourth Bid Emerges

The pressure on US-listed Chinese stocks to go private or change listing venue by 2024 is still on. However, this is an Avoid. Despite numerous...

David Blennerhassett

Hollysys (HOLI US): The Subtle Third Offer

Hollysys, even without thinking about a deal, is cheap. And you have two friendly parties pitching Offers in excess of the last traded price. On...

David Blennerhassett

IClick(ICLK US): PAG & Oasis Shake The Trees

Buying around here is probably going to have limited downside. I think PAG/Oasis' intent is to shake out potential suitors - including the co...

David Blennerhassett

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