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

<p>As long as market dynamics remain largely positive and the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we believe a constructive outlook is warranted. To reiterate, support levels to watch include $90 on ACWI-US, $53 on ACWX-US, and $52 on EEM-US. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.</p>

As long as market dynamics remain largely positive and the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we believe a constructive outlook is warranted. To reiterate, support levels to watch include $90 on ACWI-US, $53 on ACWX-US, and $52 on EEM-US. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.

Global Equity Strategy: Constructive Pullback; Overweight Value

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

<p>After Japan's earthquake automobile makers had a lot to worry about, since they were already faced with critical semiconductor shortages.  Now unusually bad weather has hit much of the US, and has stopped chip production in three important fabs in Austin, Texas.  This Insight explores the winners and losers in this series of events.</p>

After Japan's earthquake automobile makers had a lot to worry about, since they were already faced with critical semiconductor shortages.  Now unusually bad weather has hit much of the US, and has stopped chip production in three important fabs in Austin, Texas.  This Insight explores the winners and losers in this series of events.

Texas Weather Deals Second Blow to Automotive Chip Supply Chain

<p>Saturday's 7.1 earthquake in Japan could have caused important supply disruptions for semiconductors.  We reached out to over a dozen companies to check their status, and those who replied indicated that there was little impact.  Still, the automotive sector has reason to be nervous.</p>

Saturday's 7.1 earthquake in Japan could have caused important supply disruptions for semiconductors.  We reached out to over a dozen companies to check their status, and those who replied indicated that there was little impact.  Still, the automotive sector has reason to be nervous.

Japan Quake and Chip Shortages, Tough on Auto?

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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<p>On 4 February, Daimler announced the spin-off of the truck division. It will list Daimler Trucks before the end of 2021 and distribute a majority stake to Daimler shareholders. From that moment on, Daimler will be renamed Mercedes-Benz.</p>
<p>This operation had been the subject of much speculation in the past, considering that segmenting both the passenger and the commercial vehicle business would offer a higher valuation of each of them. However, Daimler had been reluctant. This move makes sense, in my view.</p>
<p>It will enable Mercedes-Benz's strategy to focus on electrification and self-driving, areas in which other competitors (BMW, for example) are more advanced. Daimler Trucks will focus on improving margins and profitability while focusing on the development of other technologies (hydrogen fuel cell) as an alternative to the traditional combustion engine.</p>
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<p>Taking into account the multiples of other competitors, the valuation of Daimler Trucks could reach around €30 bn - €35 bn, according to consensus.</p>
<p>I value Daimler as a SOTP and obtain a <strong>value per share of €71.86</strong>.</p>
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<li>Considering the multiples of Volvo and Traton, the valuation of Daimler Trucks could reach up to €38.7 bn before debt, although it would need to significantly improve its returns to achieve that valuation.</li>
<li>The conglomerate discount of Daimler should reduce as the spin-off gets closer.</li>
<li>Corporate restructuring will be a catalyst for the stock price, in my view.</li>
<li>Moreover, a spin-off is shareholder friendly as a minority IPO (say the plans of Repsol Renewables) usually represent a limited valuation upside for the parent.</li>
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<p>Recommendation is <strong>Long DAI GR</strong>, <strong>TP €71.86</strong>.</p>
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<div>The reorganisation announcement triggered the price of Daimler, which rose 8.9%, to reach a market cap of €67.6 bn.</div>
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On 4 February, Daimler announced the spin-off of the truck division. It will list Daimler Trucks before the end of 2021 and distribute a majority stake to Daimler shareholders. From that moment on, Daimler will be renamed Mercedes-Benz.
This operation had been the subject of much speculation in the past, considering that segmenting both the passenger and the commercial vehicle business would offer a higher valuation of each of them. However, Daimler had been reluctant. This move makes sense, in my view.
It will enable Mercedes-Benz's strategy to focus on electrification and self-driving, areas in which other competitors (BMW, for example) are more advanced. Daimler Trucks will focus on improving margins and profitability while focusing on the development of other technologies (hydrogen fuel cell) as an alternative to the traditional combustion engine.

Taking into account the multiples of other competitors, the valuation of Daimler Trucks could reach around €30 bn - €35 bn, according to consensus.
I value Daimler as a SOTP and obtain a value per share of €71.86.

Considering the multiples of Volvo and Traton, the valuation of Daimler Trucks could reach up to €38.7 bn before debt, although it would need to significantly improve its returns to achieve that valuation.
The conglomerate discount of Daimler should reduce as the spin-off gets closer.
Corporate restructuring will be a catalyst for the stock price, in my view.
Moreover, a spin-off is shareholder friendly as a minority IPO (say the plans of Repsol Renewables) usually represent a limited valuation upside for the parent.


Recommendation is Long DAI GR, TP €71.86.

The reorganisation announcement triggered the price of Daimler, which rose 8.9%, to reach a market cap of €67.6 bn.








  

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> plumbs a new discount to NAV low after <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Auto (708 HK)</a>'s meteoric post-placement gain; <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> discount to NAV retraces, as expected; and <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> still look cheap versus its sum of parts.</p>
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<p>Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...

Evergrande Real Estate Group (3333 HK) plumbs a new discount to NAV low after Evergrande Auto (708 HK)'s meteoric post-placement gain; PCCW Ltd (8 HK) discount to NAV retraces, as expected; and LG Corp (003550 KS) still look cheap versus its sum of parts.




Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Evergrande Auto, PCCW, LG Corp

Germany

Mercedes-Benz Group AG operates as an automobile company. The Company designs, manufactures, distributes, and sells a wide range of automotive products such as passenger cars, trucks, vans, and buses. Mercedes-Benz Group also provides financial and other services relating to its automotive businesses.

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Mercedes-Benz Group (MBG GR)

Global Equity Strategy: Constructive Pullback; Overweight Value

As long as the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we...

Vermilion Research

Texas Weather Deals Second Blow to Automotive Chip Supply Chain

A chip shortage is preventing the automotive industry from returning to full volume. Meanwhile Japan's earthquake and bad weather in Texas are...

Jim Handy

Japan Quake and Chip Shortages, Tough on Auto?

Will Saturday's Japan earthquake further disrupt the semiconductor supply chain? Early reports seem tame enough, but automobile manufacturers are...

Jim Handy

Daimler Spin-Off

I value Daimler as a SOTP. The conglomerate discount should reduce as the spin-off gets closer. Moreover, a spin-off is shareholder friendly. Long...

Jesus Rodriguez Aguilar

StubWorld: Evergrande Auto, PCCW, LG Corp

Chine Evergrande (3333 HK) looks "cheap" and Evergrande Auto (708 HK) frothy, suggesting a set-up here. Personally, I would avoid both.

David Blennerhassett

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