Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  
</li>
<li>
<a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">POWER ASSETS HOLDINGS (6 HK)</a> has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH GROUP (288 HK)</a> has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 
</li>
</ul>



BYD (1211 HK) shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  


POWER ASSETS HOLDINGS (6 HK) has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 


WH GROUP (288 HK) has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 



Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> is two businesses - a US pork processor and a Chinese one - and both businesses are suffering lower margins than they'd like.</li>
<li>But they are doing better than and are cheaper than peers. And still the stock falls. Today, the stock price hit a 6-year low on dramatic underperformance of peers.</li>
<li>The question is what the proper discount would be for people who question its governance credentials. It's a really big discount now.</li>
</ul>



WH Group (288 HK) is two businesses - a US pork processor and a Chinese one - and both businesses are suffering lower margins than they'd like.
But they are doing better than and are cheaper than peers. And still the stock falls. Today, the stock price hit a 6-year low on dramatic underperformance of peers.
The question is what the proper discount would be for people who question its governance credentials. It's a really big discount now.


WH Group (288 HK) - Now Cheapest in Yonks Outright and Vs Peers

The shares of <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in <a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud</a>. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

The shares of WH Group (288 HK) to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

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

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two weeks. Overhead resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our bullish outlook remains appropriate.  In today's report we highlight attractive charts in both defensive and cyclical Sectors. On the semi-defensive side, Sectors covered include Health Care and Services. On the cyclical side, Sectors covered include Energy, Financials, Materials, and Transportation

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two weeks. Overhead resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our bullish outlook remains appropriate.  In today's report we highlight attractive charts in both defensive and cyclical Sectors. On the semi-defensive side, Sectors covered include Health Care and Services. On the cyclical side, Sectors covered include Energy, Financials, Materials, and Transportation

Global Equity Strategy: Short-Term Bullish Trends Clash With Longer-Term Resistance

Canada

Maple Leaf Foods Inc. manufactures and sells a variety of food products. The Company's products include fresh and prepared meats, poultry, flours, pasta, seafood, and pet and animal feeds. These products are primarily sold to retail, food service, wholesale, agricultural and industrial customers worldwide.

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Maple Leaf Foods (MFI CN)

Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

BYD Company, Power Assets and WH Group all experienced breakouts during the week. WH Group announced a spin off of its Smithfield Foods business...

David Mudd

WH Group (288 HK) - Now Cheapest in Yonks Outright and Vs Peers

WH Group has always been cheap to its peer group. Now it is worse. Pork prices are underperforming feed prices, lowering margins worldwide. WH has...

Travis Lundy

WH Group Post-Tender Outlook

Buyback Offer shares are returned. Now we look forward. Of course, we did before in assuming participation rates. The stock is cheap on accretion...

Travis Lundy

Global Equity Strategy: Short-Term Bullish Trends Clash With Longer-Term Resistance

For now we view the recent pullback as a countertrend move that helped correct the extended and overbought conditions we noted over the past two...

Vermilion Research

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