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

MSCI Emerging Markets Index / Technical Analysis

<ul>
<li>In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. </li>
<li>The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).</li>
<li>The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).</li>
</ul>


In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. 
The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).
The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).


MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

O-Net Technologies (Group)  / Event-Driven

<div>
<p>On the 8 July, <a href="https://www.smartkarma.com/entities/o-net-technologies-group-limited" target="_blank" data-smartkarma-citation="entities:16122:1" rel="noopener">O-Net Technologies (Group) (877 HK)</a>, a leader in the provision of high-technology products and optical networking components,  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0708/2020070800600.pdf" target="_blank" rel="noopener">announced</a> an Offer by way of a Scheme, with a cancellation price of HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The Offer price was final.</p>
<p>Na Qinglin (chairman of O-Net) (34.5% of shares out), <a href="https://www.smartkarma.com/entities/shenzhen-kaifa-technology-a" target="_blank" data-smartkarma-citation="entities:20393:1" rel="noopener">Shenzhen Kaifa Technology A (000021 CH)</a> (20.52%) and HC Capital (0.33%) are acting in concert, leaving 44.65% (372.408mn shares) in the hands of Disinterested Shareholders.</p>
<p>Therefore the blocking stake at the Scheme Meeting is 37.24mn shares or 4.465% of shares out. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. The headcount test applies as O-Net is Cayman incorporated. </p>
</div>
<div>
<p>The Scheme Document is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0901/2020090101388.pdf" target="_blank" rel="noopener">out</a>. The Scheme Meeting will be held on 25 September with expected payment (assuming shareholders approve the Scheme) on the 27 October, just under a week past my initial timetable expectation. The IFA (Somerley) considers the offer to be "fair and reasonable."</p>
</div>
<div>
<p>This is a pretty clean deal. I'd get involved at a gross/annualised spread at 2.7%/19.2%.</p>
</div>
<div>
<p>As always, more below the fold.</p>
<hr>
<div>
<p><em>Past insights on O-Net</em></p>
</div>
<div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 218.75px;">
<h3>Date</h3>
</td>
<td style="width: 484.782px;">
<h3>Insight</h3>
</td>
</tr>
<tr>
<td style="width: 218.75px;">7-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/nqHJk" target="_blank" rel="noopener">O-Net Tech (877 HK): Tripping The Light Fantastic</a></td>
</tr>
<tr>
<td style="width: 218.75px;">9-Jul-20</td>
<td style="width: 484.782px;"><a href="https://skr.ma/8Bd58" target="_blank" rel="noopener">O-Net (877 HK): Swish Switches Offer</a></td>
</tr>
</tbody>
</table>
</div>
</div>
</div>


On the 8 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components,  announced an Offer by way of a Scheme, with a cancellation price of HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The Offer price was final.
Na Qinglin (chairman of O-Net) (34.5% of shares out), Shenzhen Kaifa Technology A (000021 CH) (20.52%) and HC Capital (0.33%) are acting in concert, leaving 44.65% (372.408mn shares) in the hands of Disinterested Shareholders.
Therefore the blocking stake at the Scheme Meeting is 37.24mn shares or 4.465% of shares out. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. The headcount test applies as O-Net is Cayman incorporated. 


The Scheme Document is now out. The Scheme Meeting will be held on 25 September with expected payment (assuming shareholders approve the Scheme) on the 27 October, just under a week past my initial timetable expectation. The IFA (Somerley) considers the offer to be "fair and reasonable."


This is a pretty clean deal. I'd get involved at a gross/annualised spread at 2.7%/19.2%.


As always, more below the fold.


Past insights on O-Net







Date


Insight



7-Jul-20
O-Net Tech (877 HK): Tripping The Light Fantastic


9-Jul-20
O-Net (877 HK): Swish Switches Offer







O-Net (877 HK): Offer Doc Out. Priced To Complete

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p><a href="https://www.smartkarma.com/entities/o-net-technologies-group-limited" target="_blank" data-smartkarma-citation="entities:16122:1" rel="noopener">O-Net Technologies (Group) (877 HK)</a> designs, manufactures and sells optical networking products for the high-speed telco and data communications systems as well as machine vision systems and sensors for smart manufacturing market. After market close on Wednesday, it announced a privatisation offer by way of a scheme of arrangement from Optical Beta Limited. The offeror will offer HK$6.50 cash per scheme share. The bid represents a premium of 23.57% over the closing price of HK$5.26 per share on the last trading day (3 July 2020).</p><div class="content-highlight"><p>The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. Overall, we believe that the privatisation bid will be successful. </p></div>

O-Net Technologies (Group) (877 HK) designs, manufactures and sells optical networking products for the high-speed telco and data communications systems as well as machine vision systems and sensors for smart manufacturing market. After market close on Wednesday, it announced a privatisation offer by way of a scheme of arrangement from Optical Beta Limited. The offeror will offer HK$6.50 cash per scheme share. The bid represents a premium of 23.57% over the closing price of HK$5.26 per share on the last trading day (3 July 2020).The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. Overall, we believe that the privatisation bid will be successful. 

<div>
<p>On the 6 July, <a href="https://www.smartkarma.com/entities/o-net-technologies-group-limited" target="_blank" data-smartkarma-citation="entities:16122:1" rel="noopener">O-Net Technologies (Group) (877 HK)</a>, a leader in the provision of high-technology products and optical networking components, was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0706/2020070600117.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Code on Takeovers and Mergers.</p>
<p>An Offer, by way of a Scheme, has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0708/2020070800600.pdf" target="_blank" rel="noopener">announced</a>. The cancellation price is HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The price will not be increased.</p>
<p>Disinterested Shareholders comprise 375.196mn shares, or 44.99% of shares out. Therefore the blocking stake at the Scheme Meeting is 37.52mn shares or 4.499% of shares out - or HK$197mn using the undisturbed close. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. </p>
<p>O-Net is Cayman incorporated therefore the headcount test applies. </p>
</div>
<div>
<p>Assuming the deal gets up, this may be wrapped up by late October.</p>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


On the 6 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components, was suspended pursuant to the Code on Takeovers and Mergers.
An Offer, by way of a Scheme, has now been announced. The cancellation price is HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The price will not be increased.
Disinterested Shareholders comprise 375.196mn shares, or 44.99% of shares out. Therefore the blocking stake at the Scheme Meeting is 37.52mn shares or 4.499% of shares out - or HK$197mn using the undisturbed close. The 10% blocking stake is attached to ALL of the Scheme Shares held by the Disinterested Shareholders. 
O-Net is Cayman incorporated therefore the headcount test applies. 


Assuming the deal gets up, this may be wrapped up by late October.


As always, more below the fold.


<div>
<p><a href="https://www.smartkarma.com/entities/o-net-technologies-group-limited" target="_blank" data-smartkarma-citation="entities:16122:1" rel="noopener">O-Net Technologies (Group) (877 HK)</a>, a leader in the provision of high-technology products and optical networking components, is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0706/2020070600117.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Code on Takeovers and Mergers.</p>
<p>Its two major shareholders collectively hold 48.31%, down from 72.69% at the time of O-Net's listing in 2010. O-Net is Cayman incorporated. If a firm Offer is tabled by way of a Scheme, the headcount test applies.</p>
<p>O-Net is up 27% YTD, and just ~3.5% below the recent June high, which was also a two-year high.</p>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components, is currently suspended pursuant to the Code on Takeovers and Mergers.
Its two major shareholders collectively hold 48.31%, down from 72.69% at the time of O-Net's listing in 2010. O-Net is Cayman incorporated. If a firm Offer is tabled by way of a Scheme, the headcount test applies.
O-Net is up 27% YTD, and just ~3.5% below the recent June high, which was also a two-year high.


As always, more below the fold.


O-Net Tech (877 HK): Tripping The Light Fantastic

China

Shenzhen Kaifa Technology Co., Ltd.  manufactures and markets computer hardware, peripheral equipment, communication equipment, and other electronic instruments and components.The Company's main products include magnetic heads and hard disks.

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Shenzhen Kaifa Technology A (000021 CH)

MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Signs continue to point to a topping $DXY, and a declining DXY has historically resulted in EM outperformance (vs. $EAFE). Many ideas in China/Hong...

Vermilion Research

O-Net (877 HK): Offer Doc Out. Priced To Complete

On the 6 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components,...

David Blennerhassett

O-Net’s Privatisation Bid

O-Net Technologies (Group) (877 HK) designs, manufactures and sells optical networking products for the high-speed telco and data communications...

Arun George

O-Net (877 HK): Swish Switches Offer

On the 6 July, O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components, was...

David Blennerhassett

O-Net Tech (877 HK): Tripping The Light Fantastic

O-Net Technologies (Group) (877 HK), a leader in the provision of high-technology products and optical networking components, is currently...

David Blennerhassett

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