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

Oil & Natural Gas Corp / Technical Analysis

<ul>
<li>MSCI EM (EEM-US) has continued to hold above our $37-$37.50 line-in-the-sand, meaning we are constructive from a price perspective.</li>
<li>We have maintained an underweight to emerging markets, and we are overweight developed international (MSCI EAFE, Europe, Japan) as discussed in in Int’l Compass and ETF Pathfinder reports throughout 2023.</li>
<li>Still, there are plenty of attractive countries and Sectors within the EM landscape, which is what we are focusing on today.</li>
</ul>


MSCI EM (EEM-US) has continued to hold above our $37-$37.50 line-in-the-sand, meaning we are constructive from a price perspective.
We have maintained an underweight to emerging markets, and we are overweight developed international (MSCI EAFE, Europe, Japan) as discussed in in Int’l Compass and ETF Pathfinder reports throughout 2023.
Still, there are plenty of attractive countries and Sectors within the EM landscape, which is what we are focusing on today.


EM Strategy: MSCI EM Financials & Energy Improving-Overweight; Overweights: Taiwan, India, Mexico

<ul>
<li>The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.</li>
<li>As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.</li>
<li>China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.</li>
</ul>


The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.


EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

National Bank Of Greece Sa / Equity Bottom-Up

PH Score™   7.4While Greek Bank PH Scores™ are mostly somewhat downbeat, with C-19 curtailing temporarily years of progression at banks and in the economy in general, National Bank of Greece stands out.ETE balances consumer (43.5% of Loans) and corporate credit (56.5%) provision, backed by CASA funding (78% of Deposits)- mainly from Savings. The bank is in its third year of a transformation plan which is beginning to show tangible operational improvement while e-banking is performing well. Asset Quality ratios continue to make great strides while less than 7% of moratoria beneficiaries are in early arrears (&gt;30dpd). On the capital front, ETE has enhanced its capital position, delivering CET1 and Total CAD ratios of 16.1% and 17.1% respectively, up by some 40bps q-o-q. The latter is expected to improve further by some 170bps upon the completion of the Frontier and Ethniki Insurance transactions, expected in the next few months.The PH Score™ of ETE is favorable given amelioration in Profitability, in Efficiency, in Liquidity, and in Asset Quality. There was though some NIM/Spread compression, softer Provisioning, and erosion in the model’s Capitalisation variable though we note that other Capital Ratios are improving.<div class="content-highlight">A FV of 5%, a PBV of 0.44x, and an Earnings Yield of 12.45% are not unattractive. The bank commands strong fundamental momentum given the high PH Score™.</div>

PH Score™   7.4While Greek Bank PH Scores™ are mostly somewhat downbeat, with C-19 curtailing temporarily years of progression at banks and in the economy in general, National Bank of Greece stands out.ETE balances consumer (43.5% of Loans) and corporate credit (56.5%) provision, backed by CASA funding (78% of Deposits)- mainly from Savings. The bank is in its third year of a transformation plan which is beginning to show tangible operational improvement while e-banking is performing well. Asset Quality ratios continue to make great strides while less than 7% of moratoria beneficiaries are in early arrears (&gt;30dpd). On the capital front, ETE has enhanced its capital position, delivering CET1 and Total CAD ratios of 16.1% and 17.1% respectively, up by some 40bps q-o-q. The latter is expected to improve further by some 170bps upon the completion of the Frontier and Ethniki Insurance transactions, expected in the next few months.The PH Score™ of ETE is favorable given amelioration in Profitability, in Efficiency, in Liquidity, and in Asset Quality. There was though some NIM/Spread compression, softer Provisioning, and erosion in the model’s Capitalisation variable though we note that other Capital Ratios are improving.A FV of 5%, a PBV of 0.44x, and an Earnings Yield of 12.45% are not unattractive. The bank commands strong fundamental momentum given the high PH Score™.

Thematic (Sector/Industry)

Piraeus dedicates itself mainly to corporate credit (64% of loans) but also to the consumer segment (36%), backed by CASA funding (71% of deposits) and wholesale markets. The bank commands a 31% and 29% share, respectively, of Loans and Deposits in Greece. Piraeus is especially strong in Northern Greece where it holds a 40% share of all credit.The bank endured a torrid 2020 with Capitalization coming under renewed pressure and modest progress in bringing Asset Quality under better control : true, Asset Quality is much better than at the NPE peak in 2015. FY20/19 results show adverse fundamental momentum and trends with deterioration in Profitability, in NIM, in headline Asset Quality, in Provisioning, and in Capital Adequacy though Efficiency and Liquidity both improved. Management states that it in phase 3 of a strategic plan which now focuses on digitalization, credit expansion, operating efficiency, and a “radical” NPE clean-up.  Management believes that in this phase with the support of shareholders, the bond market, and the government, it can reach sunnier climbs. The bank’s "Sunrise Plan" targets a single-digit NPE ratio over the next 12 months and a share capital increase of some €1.0 billion. The group plans to achieve a single-digit NPE ratio in the next 12 months and &lt; 3% in the medium term. The aim is to get NPEs to about €3.6 billion in the next 12 months and to €1 billion in the medium term from €22.5 billion at FY2020. The NPE reduction plan depends on securitization and derecognition of NPEs with an estimated gross book value of up to €19 billion, including the Phoenix and Vega projects. The incremental NPE securitizations, Sunrise 1 and Sunrise 2, totaling €7 billion and €4 billion, respectively, will be carried out using Greece's Hellenic Asset Protection Scheme 2. Senior notes of roughly €6.5 billion from the “HAPS” transactions will be retained by Piraeus Bank, while it may distribute the majority of the mezzanine and junior notes to shareholders of Piraeus Financial Holdings. The group also intends to sell up to €1.5 billion of NPEs outside “HAPS” to further de-risking initiatives. To complement the aforementioned €1 billion non-preemptive fully marketed offering of shares, the group also plans to issue as much as €600 million of Additional Tier 1 bonds. Piraeus Bank SA also agreed to carve out and sell its merchant acquiring business unit to Euronet Worldwide for €300 million, which will also bolster capital further. Looking ahead, Piraeus is shooting for a CAR of &gt; 16% and a ROTE of &gt; 10%.<div class="content-highlight">A FV of 1% and a PBV of 0.05x are in the global bargain basement. The bank has a bottom quartile PH Score™ (2.2). News flow on a dilutive capital raise have reduced RSI to quite low levels and share price underperformance versus better quality peers is now extreme. If management executes its plan, shares in this rich franchise will be worthwhile at some stage this year with a long-term patient mindset.</div>

Piraeus dedicates itself mainly to corporate credit (64% of loans) but also to the consumer segment (36%), backed by CASA funding (71% of deposits) and wholesale markets. The bank commands a 31% and 29% share, respectively, of Loans and Deposits in Greece. Piraeus is especially strong in Northern Greece where it holds a 40% share of all credit.The bank endured a torrid 2020 with Capitalization coming under renewed pressure and modest progress in bringing Asset Quality under better control : true, Asset Quality is much better than at the NPE peak in 2015. FY20/19 results show adverse fundamental momentum and trends with deterioration in Profitability, in NIM, in headline Asset Quality, in Provisioning, and in Capital Adequacy though Efficiency and Liquidity both improved. Management states that it in phase 3 of a strategic plan which now focuses on digitalization, credit expansion, operating efficiency, and a “radical” NPE clean-up.  Management believes that in this phase with the support of shareholders, the bond market, and the government, it can reach sunnier climbs. The bank’s "Sunrise Plan" targets a single-digit NPE ratio over the next 12 months and a share capital increase of some €1.0 billion. The group plans to achieve a single-digit NPE ratio in the next 12 months and &lt; 3% in the medium term. The aim is to get NPEs to about €3.6 billion in the next 12 months and to €1 billion in the medium term from €22.5 billion at FY2020. The NPE reduction plan depends on securitization and derecognition of NPEs with an estimated gross book value of up to €19 billion, including the Phoenix and Vega projects. The incremental NPE securitizations, Sunrise 1 and Sunrise 2, totaling €7 billion and €4 billion, respectively, will be carried out using Greece's Hellenic Asset Protection Scheme 2. Senior notes of roughly €6.5 billion from the “HAPS” transactions will be retained by Piraeus Bank, while it may distribute the majority of the mezzanine and junior notes to shareholders of Piraeus Financial Holdings. The group also intends to sell up to €1.5 billion of NPEs outside “HAPS” to further de-risking initiatives. To complement the aforementioned €1 billion non-preemptive fully marketed offering of shares, the group also plans to issue as much as €600 million of Additional Tier 1 bonds. Piraeus Bank SA also agreed to carve out and sell its merchant acquiring business unit to Euronet Worldwide for €300 million, which will also bolster capital further. Looking ahead, Piraeus is shooting for a CAR of &gt; 16% and a ROTE of &gt; 10%.A FV of 1% and a PBV of 0.05x are in the global bargain basement. The bank has a bottom quartile PH Score™ (2.2). News flow on a dilutive capital raise have reduced RSI to quite low levels and share price underperformance versus better quality peers is now extreme. If management executes its plan, shares in this rich franchise will be worthwhile at some stage this year with a long-term patient mindset.

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

Greece

National Bank of Greece S.A. offers retail and corporate banking services. The Bank accepts deposits and offers loans, lease financing, mortgages, and investing and insurance services to industrial, commercial, and consumer clients. National Bank of Greece operates domestically and overseas.

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National Bank Of Greece Sa (ETE GA)

EM Strategy: MSCI EM Financials & Energy Improving-Overweight; Overweights: Taiwan, India, Mexico

MSCI EM Financials & Energy Improving -- Upgrading to Overweight; MSCI EM Technology remains an Overweight. Top Country Overweights: Taiwan, India,...

Vermilion Research

EM Outperformance to Continue (Vs. EAFE) -- Add on a Pullback; DXY Needs to Hold Below $106

EM vs. EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the $DXY peaked in November 2022. If the DXY remains below...

Vermilion Research

ETE: A Standout in Greece

Unlike other Greek lenders, National Bank of Greece is making strong fundamental progress and the shares are far from dear.

Paul Hollingworth

Piraeus: Goodbye 2020, Hello Sunrise

Piraeus struggled in 2020 and news of a capital increase have clobbered shares. We do though see deep value over the long-term - if they execute on...

Paul Hollingworth

Global Equity Strategy: Small-Caps and Value Stocks Remain in Focus

We are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

Vermilion Research

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