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

Market activity, both bonds and stocks, has been all about realigning expectations. Wednesday’s Fed announcement was more dovish than expected, and the market is now pricing in roughly 25bps of cuts by the end of 2019. Stocks reacted positively on Thursday, but then reversed (and then some) on Friday as global growth concerns became a little more serious. We continue to maintain our positive outlook. In today’s report we recap our bullish investment thesis and highlight attractive Groups and stocks within Consumer Staples, Materials, and Services.

Market activity, both bonds and stocks, has been all about realigning expectations. Wednesday’s Fed announcement was more dovish than expected, and the market is now pricing in roughly 25bps of cuts by the end of 2019. Stocks reacted positively on Thursday, but then reversed (and then some) on Friday as global growth concerns became a little more serious. We continue to maintain our positive outlook. In today’s report we recap our bullish investment thesis and highlight attractive Groups and stocks within Consumer Staples, Materials, and Services.

U.S. Equity Strategy: Bullish Outlook Intact

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

<ul class="">
<li>The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit cards</li>
<li>De-regulation and new entrants have brought challenges for the incumbents, especially for the largest player <a href="https://www.smartkarma.com/entities/24750" target="_blank">Cielo SA (CIEL3 BZ)</a>, with the challengers taking market share, squeezing margins and promoting better service for SME merchants in particular</li>
<li>Competitive pressures continue in the Brazil payments market, reflected in the declining merchant discount rate (MDR), lower rental rates and sale prices for POS terminals, as well as pressure on the commissions for early payment of merchant receivables; the near-term prospects for Cielo remain challenging in our view</li>
<li>Due to the ongoing headwinds, we expect Cielo to show negative earnings growth to 2021; management has announced that Cielo will defend its market share against the challengers; we see further downside risk to consensus earnings and the real risk of a greater than consensus 2019 DPS cut</li>
<li>
<a href="https://www.smartkarma.com/entities/27564" target="_blank">StoneCo Ltd (STNE US)</a>and <a href="https://www.smartkarma.com/entities/27939" target="_blank">Pagseguro Digital Ltd (PAGS US)</a> are two of the payment challengers in this de-regulated market, growing faster than the Brazilian non-cash transactions market and taking incumbents' market share; we see StoneCo to be the preferred entity to PagSeguro, based on StoneCo’s higher revenue yielding SME segment of focus and on its more attractive PEG ratio valuation</li>
</ul>


The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit cards
De-regulation and new entrants have brought challenges for the incumbents, especially for the largest player Cielo SA (CIEL3 BZ), with the challengers taking market share, squeezing margins and promoting better service for SME merchants in particular
Competitive pressures continue in the Brazil payments market, reflected in the declining merchant discount rate (MDR), lower rental rates and sale prices for POS terminals, as well as pressure on the commissions for early payment of merchant receivables; the near-term prospects for Cielo remain challenging in our view
Due to the ongoing headwinds, we expect Cielo to show negative earnings growth to 2021; management has announced that Cielo will defend its market share against the challengers; we see further downside risk to consensus earnings and the real risk of a greater than consensus 2019 DPS cut

StoneCo Ltd (STNE US)and Pagseguro Digital Ltd (PAGS US) are two of the payment challengers in this de-regulated market, growing faster than the Brazilian non-cash transactions market and taking incumbents' market share; we see StoneCo to be the preferred entity to PagSeguro, based on StoneCo’s higher revenue yielding SME segment of focus and on its more attractive PEG ratio valuation


Brazilian Payments Report: Cielo on the Defensive Against Disruptive Challengers

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/15529" target="_blank" data-smartkarma-citation="entities:15529:1">Mastercard Inc Class A (MA US)</a> has a made a <a href="https://earthport.communisis.website/wp-content/uploads/2019/01/Final-Rule-2.7-Announcement-216406-4-1010-v0.4.pdf" target="_blank">£233mn Offer</a> to take over cross-border payments firm <a href="https://www.smartkarma.com/entities/23493" target="_blank" data-smartkarma-citation="entities:23493:1">Earthport plc (EPO LN)</a>, trumping <a href="https://www.smartkarma.com/entities/8707" target="_blank" data-smartkarma-citation="entities:8707:1">Visa Inc Class A Shares (V US)</a>'s <a href="https://www.earthport.com/wp-content/uploads/2018/12/Project-Edge-Final-Rule-2.7-Announcement-27-December.pdf" target="_blank">offer</a> late last month by 10%.
EPO's board has recommended Mastercard's Offer to its shareholders. Visa's Scheme meeting, initially scheduled for the 21 February, has been adjourned.
Mastercard's £0.33/share offer compares to Visa's <a href="https://www.earthport.com/wp-content/uploads/2018/12/Project-Edge-Final-Rule-2.7-Announcement-27-December.pdf" target="_blank">£0.30/share tilt</a>, and represents a 340% premium over EPO's undisturbed price of £0.075/share.
The Offer is conditional on 75% of EPO's shareholders accepting with 13.08% of shares outstanding in the bag.  Mastercard will move to cancel the shares on AIM if it achieves 75%.
EPO's shares increased to £0.282 following Visa's offer, but currently trades at ~£0.37, 12% above the latest offer, suggesting a higher bid is likely, or at least expected. 
Cross-border payments are an estimated US$30tn business and both credit card giants are registering higher annual growth and billions of dollars in fees. EPO is a drop in the ocean for Mastercard (US$205bn market cap) and Visa (US$297bn).
Arguably this deal could run significantly higher - the question is how desperate these two players are towards buying now as opposed to building.
And it's not just small transactions in the payment industry getting attention, after <a href="https://www.smartkarma.com/entities/4980" target="_blank" data-smartkarma-citation="entities:4980:1">Fiserv Inc (FISV US)</a>'s announcement earlier this month it would merge with <a href="https://www.smartkarma.com/entities/26501" target="_blank" data-smartkarma-citation="entities:26501:1">First Data Corp (FDC US)</a> in a US$22bn transaction, and <a href="https://www.smartkarma.com/entities/4747" target="_blank" data-smartkarma-citation="entities:4747:1">Paypal Holdings (PYPL US)</a>'s US$2.2bn acquisition of Sweden's iZettle last year.

Mastercard Inc Class A (MA US) has a made a £233mn Offer to take over cross-border payments firm Earthport plc (EPO LN), trumping Visa Inc Class A Shares (V US)'s offer late last month by 10%.
EPO's board has recommended Mastercard's Offer to its shareholders. Visa's Scheme meeting, initially scheduled for the 21 February, has been adjourned.
Mastercard's £0.33/share offer compares to Visa's £0.30/share tilt, and represents a 340% premium over EPO's undisturbed price of £0.075/share.
The Offer is conditional on 75% of EPO's shareholders accepting with 13.08% of shares outstanding in the bag.  Mastercard will move to cancel the shares on AIM if it achieves 75%.
EPO's shares increased to £0.282 following Visa's offer, but currently trades at ~£0.37, 12% above the latest offer, suggesting a higher bid is likely, or at least expected. 
Cross-border payments are an estimated US$30tn business and both credit card giants are registering higher annual growth and billions of dollars in fees. EPO is a drop in the ocean for Mastercard (US$205bn market cap) and Visa (US$297bn).
Arguably this deal could run significantly higher - the question is how desperate these two players are towards buying now as opposed to building.
And it's not just small transactions in the payment industry getting attention, after Fiserv Inc (FISV US)'s announcement earlier this month it would merge with First Data Corp (FDC US) in a US$22bn transaction, and Paypal Holdings (PYPL US)'s US$2.2bn acquisition of Sweden's iZettle last year.

Earthport the Winner as Mastercard/Visa Jostle For Position

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Afterpay Touch announced an AUD 108 million institutional placement. In this insight, we have a quick look at the deal in the following topics:<ul>
<li>Placement details</li>
<li>Company background</li>
<li>Recent earnings</li>
<li>Our thoughts on valuation</li>
<li>Scores in our ECM Framework</li>
</ul>

Afterpay Touch announced an AUD 108 million institutional placement. In this insight, we have a quick look at the deal in the following topics:
Placement details
Company background
Recent earnings
Our thoughts on valuation
Scores in our ECM Framework


Afterpay Touch Placement: Strong Momentum but Valuation Is Rich

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<h2>Background</h2>Xurpas' share price has been battered down for the past 2 years since the IPO. The market was concern about the earnings and business direction of the company. Past IPO, Xurpas went on to buy a couple of companies that include Singapore-based mobile marketer Art of Click for SGD 45 million. <table class="table table-striped"><tbody>
<tr>
<td style="text-align: left; width: 159px;">Ticker</td>
<td style="text-align: right; width: 147.5px;">PSE:X</td>
</tr>
<tr>
<td style="text-align: left; width: 159px;">Company Name</td>
<td style="text-align: right; width: 147.5px;"> Xurpas Inc. </td>
</tr>
<tr>
<td style="text-align: left; width: 159px;">Market Cap USD million</td>
<td style="text-align: right; width: 147.5px;">                                     101.92</td>
</tr>
<tr>
<td style="text-align: left; width: 159px;">Free float (%)</td>
<td style="text-align: right; width: 147.5px;">                                                25.59</td>
</tr>
<tr>
<td style="text-align: left; width: 159px;">ROE (%)</td>
<td style="text-align: right; width: 147.5px;">    </td>
</tr>
</tbody></table>…

BackgroundXurpas' share price has been battered down for the past 2 years since the IPO. The market was concern about the earnings and business direction of the company. Past IPO, Xurpas went on to buy a couple of companies that include Singapore-based mobile marketer Art of Click for SGD 45 million. 

Ticker
PSE:X


Company Name
 Xurpas Inc. 


Market Cap USD million
                                     101.92


Free float (%)
                                                25.59


ROE (%)
    

…

Xurpas (X): Internet Access for Emerging Market

United States

PayPal Holdings, Inc. operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants. The Company offers online payment solutions. PayPal Holdings serves customers worldwide.

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Paypal Holdings (PYPL US)

U.S. Equity Strategy: Bullish Outlook Intact

Market activity, both bonds and stocks, has been all about realigning expectations. Wednesday’s Fed announcement was more dovish than expected, and...

Vermilion Research

Brazilian Payments Report: Cielo on the Defensive Against Disruptive Challengers

The non-cash payments market continues to grow at a double-digit rate in Brazil, driven primarily by growing usage of credit and debit...

Boost Research

Earthport the Winner as Mastercard/Visa Jostle For Position

Mastercard Inc Class A (MA US) has a made a £233mn Offer to take over cross-border payments firm Earthport plc (EPO LN), trumping Visa Inc Class A...

David Blennerhassett

Afterpay Touch Placement: Strong Momentum but Valuation Is Rich

Afterpay Touch announced an AUD 108 million institutional placement. In this insight, we have a quick look at the deal in the following...

Ke Yan, CFA, FRM

Xurpas (X): Internet Access for Emerging Market

BackgroundXurpas' share price has been battered down for the past 2 years since the IPO. The market was concern about the earnings and business...

Henry Soediarko

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)