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

Taiwan Semiconductor (TSMC) / Technical Analysis

<ul>
<li>New multi-year highs on the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes -- combined with overwhelmingly healthy market dynamics -- validates our bullish outlook on global equities.</li>
<li>We continue to view the latest 5-6% pullback on $ACWI as healthy and normal within the ongoing bull market, and we expect higher prices ahead.</li>
<li>Global Energy Sector appears to be topping, and Materials could be next. We highlight buys in Technology (quickly becoming leadership again) and Consumer Discretionary/Retail </li>
</ul>


New multi-year highs on the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes -- combined with overwhelmingly healthy market dynamics -- validates our bullish outlook on global equities.
We continue to view the latest 5-6% pullback on $ACWI as healthy and normal within the ongoing bull market, and we expect higher prices ahead.
Global Energy Sector appears to be topping, and Materials could be next. We highlight buys in Technology (quickly becoming leadership again) and Consumer Discretionary/Retail 


Global MSCI Indexes at Multi-Year Highs; Global Energy Sector Deteriorating, Is Materials Next?

Quantitative Equity Analyst, DMA

Charlotte van Tiddens, CFA

Quantitative Equity Analyst

Technology-First Company

DMA is a technology-first company that provides an end-to-end SaaS solution to institutional investors. DMA enables regulated entities like asset managers, wealth managers, investment managers and financial advisors to connect their front and back office, break silos and reduce headcount.

Event-Driven

<ul>
<li>Naspers and Prosus have announced the appointment of Fabrício Bloisi as Group CEO, effective from 1 July 2024. Unlike his predecessor, Bloisi has an entrepreneurial background.</li>
<li>Prosus and Naspers have sold off on the news. Prosus is down 1.7%, widening the discount by 80bps. Naspers is down 1.3%, widening the discount by 50bps.</li>
<li>Since Bob van Dijk stepped down in September last year, both discounts have narrowed.</li>
</ul>


Naspers and Prosus have announced the appointment of Fabrício Bloisi as Group CEO, effective from 1 July 2024. Unlike his predecessor, Bloisi has an entrepreneurial background.
Prosus and Naspers have sold off on the news. Prosus is down 1.7%, widening the discount by 80bps. Naspers is down 1.3%, widening the discount by 50bps.
Since Bob van Dijk stepped down in September last year, both discounts have narrowed.


Naspers X Prosus (NPN, PRX): Market Reacts Negatively to Appointment of CEO

<ul>
<li>Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.</li>
<li>Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.</li>
<li>China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.</li>
</ul>


Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.
Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.
China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.


Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

<ul>
<li>Tencent reported a decent set of results for Q1 FY24. Revenue for the quarter was up 2.8% QoQ and 6.3% YoY, ahead of consensus estimates (2.3% &amp; 5.9%).</li>
<li>The gross margin came in at 53%, 3 percentage points ahead of consensus, and an increase of 7 percentage points on Q1 FY23.</li>
<li>The gross margin for the Fintech and Business Services segment, which accounts for 33% of revenue, increased by 12 percentage points to 46% (consensus 42.6%).</li>
</ul>


Tencent reported a decent set of results for Q1 FY24. Revenue for the quarter was up 2.8% QoQ and 6.3% YoY, ahead of consensus estimates (2.3% &amp; 5.9%).
The gross margin came in at 53%, 3 percentage points ahead of consensus, and an increase of 7 percentage points on Q1 FY23.
The gross margin for the Fintech and Business Services segment, which accounts for 33% of revenue, increased by 12 percentage points to 46% (consensus 42.6%).


Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results

<ul>
<li>Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.</li>
<li>The game is expected to be released in China on the 21st of May following positive test results.</li>
<li>Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.</li>
</ul>


Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.
The game is expected to be released in China on the 21st of May following positive test results.
Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.


NPN X PRX Discount Update Post Tencent Early Game Release News Flow

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

Hainan Island Construction Co Ltd.  is a property development company. The Company also operates regional malls and hotels.

Guangzhou Friendship Group Co., Ltd operates supermarkets and department stores in Guangzhou, China.  The Company sells a variety of consumer products, including apparel, food and beverages, electronics, jewelry, cosmetics, and electric appliances.  Guangzhou Friendship also leases real estate properties.

Guangzhou Friendship Group Co, Ltd. (000987 CH)

Golden Eagle Retail Group Limited operates department stores in China. The Company's stores target mid-range and high-end market segments in China, and contain various functions and amenities such as dining, entertainment, beauty and personal care, cinemas, and preschool education in addition to their core function as an international department store.

Tianjin Quanye Bazaar (Group) Co., Ltd. owns and operates department stores and supermarkets, as well as sells general merchandise on a wholesale basis. Tianjin Quanye also provides storage and cargo delivery services, and invests in real estate and interior decoration businesses.

Xian International Medical Investment Co Ltd is principally engaged in the medical services industry.

Xian International Medical Invest (000516 CH)

Wangfujing Group Co., Ltd. owns and operates department stores in Beijing, Guangzhou, Chengdu, Wuhan, and other cities in China.  The Company also develops residential real estate.

Nanjing Xinjiekou Department Store Co. Ltd. operates department stores in Nanjing, Jiangsu.  Through its subsidiaries, the Company also develops real estate and manufactures pharmaceuticals.

Nanjing Xinjiekou Department S (600682 CH)

Dollar General Corporation operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern, and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health, beauty, pet supplies, and non-consumables such as seasonal merchandise.

Trent Limited operates a chain of retail stores that sell fashion apparel, cosmetics, perfumery products and toiletry items. The Company sells apparel for men, women and children. Trent sells its cosmetics products under the "Westside" and "Trent" brand names.

Dollar Tree, Inc. operates a discount variety store chain in the United States. The Company sells an assortment of everyday general merchandise at the $1.00 price point.

Pan Pacific International Holdings Corporation operates discount stores which sell consumer electronics, daily necessities, groceries, watches, and sporting goods. The Company mostly operates small scale stores based in Tokyo.

Pan Pacific International Holdings (7532 JP)

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

Next Plc conducts retailing, home shopping, and customer services management operations.  The Company's retail stores sell ladies wear, mens wear, childrens wear, and housewares.

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

Dollarama Inc. operates as an online marketplace. The Company offers cleaning, school, office, home, kitchen, food, health, beauty, hardware, electronics, toys, and pets products, as well as provides delivery services. Dollarama serves customers in Canada.

MercadoLibre, Inc. operates an online trading site for the Latin American markets. The Company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format. MercadoLibre offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

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Prosus NV (PRX SJ)

Global MSCI Indexes at Multi-Year Highs; Global Energy Sector Deteriorating, Is Materials Next?

There are few things more bullish than Global MSCI Indexes at Multi-Year Highs $ACWI $ACWX $EFA $EEM; Buys in Tech $TSM; Global Energy Sector...

Vermilion Research

Naspers X Prosus (NPN, PRX): Market Reacts Negatively to Appointment of CEO

A recap on the market reaction to the appointment of Bloisi as Naspers and Prosus CEO. Naspers ended the day down 4.09% on Friday. Prosus closed...

DMA

Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Bullish Outlook Intact $ACWI; EM and China Continue to Lead; U.S. Dollar (DXY), WTI Crude Oil, and Gasoline Prices Rolling Over; Buys in: Comms,...

Vermilion Research

Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results

Tencent reported a decent set of results for Q1 FY24, driven by notable margin expansion across segments (well ahead of consensus estimates).

DMA

NPN X PRX Discount Update Post Tencent Early Game Release News Flow

Naspers outperformed Prosus last week as Tencent announced that DnF mobile would be released earlier on the 21st of May.

DMA

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