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

<ul>
<li>Our key "lines in the sand" were tested last week, including 4257 on the S&amp;P 500, $334 on QQQ, 33,250 on the DJIA, and $102.50 on the S&amp;P 600 (IJR).</li>
<li>After a brief dip below these levels, buyers immediately stepped up and reclaimed these supports. It was a clear win for the bulls (for now).</li>
<li>Attractive and actionable Groups highlighted include fertilizer (ag chemicals), aerospace/defense, and shipping.</li>
</ul>


Our key "lines in the sand" were tested last week, including 4257 on the S&amp;P 500, $334 on QQQ, 33,250 on the DJIA, and $102.50 on the S&amp;P 600 (IJR).
After a brief dip below these levels, buyers immediately stepped up and reclaimed these supports. It was a clear win for the bulls (for now).
Attractive and actionable Groups highlighted include fertilizer (ag chemicals), aerospace/defense, and shipping.


Volatility & Consolidation Continues; Buying Ag Chemicals, Aerospace/Defense, and Shipping Stocks

Now that the initial/primary low has been established and with the S&amp;P 500 roughly 20% off the lows, we believe it is time to map out potential areas where this rally could run into resistance. After this type of major waterfall decline there is often a test of the initial low - and there is often an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 (chloroquine/hydroxychloroquine?) we are of the belief that a test of this initial low (likely 2-12 weeks out) and potentially an undercut of roughly 10% are likely.

Now that the initial/primary low has been established and with the S&amp;P 500 roughly 20% off the lows, we believe it is time to map out potential areas where this rally could run into resistance. After this type of major waterfall decline there is often a test of the initial low - and there is often an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 (chloroquine/hydroxychloroquine?) we are of the belief that a test of this initial low (likely 2-12 weeks out) and potentially an undercut of roughly 10% are likely.

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US equity market. At this point in time, the rising tensions have done virtually no damage to the bullish trends and indicators that continue to dominate the market. In today’s report we highlight attractive Groups and stocks within Manufacturing, Services, Technology, and Transportation: Aero Defense, Large-Cap, HR &amp; Employment Svcs, Large-Cap, Optical Equipment, and Shipping, Energy

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US equity market. At this point in time, the rising tensions have done virtually no damage to the bullish trends and indicators that continue to dominate the market. In today’s report we highlight attractive Groups and stocks within Manufacturing, Services, Technology, and Transportation: Aero Defense, Large-Cap, HR &amp; Employment Svcs, Large-Cap, Optical Equipment, and Shipping, Energy

U.S. Equity Strategy: Bullish Outlook Intact

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Equity Bottom-Up

Teekay Tankers Ltd Class A / Equity Bottom-Up

<ul><li>
Earnings to improve; positive outlook in medium term: Frontline (FRO) reported net profit of USD 2.2m in 3Q18, compared with net loss of USD 24.1m in 3Q17. This was because the company’s VLCC fleet-realised TCE rates increased from USD 13,200pd in 3Q17 to USD 19,900pd in 3Q18; additionally there were other operating gains of USD 12.8m. For 4Q18, the company locked in 77% of its VLCC trading days at USD 34,000pd and 65% of the available Suezmax spot days at USD 24,000pd. Additionally, 59% of the LR2 days have been covered at USD 17,000pd. Freight rates could rise further in the remaining days of the quarter. We expect the TCE revenue to increase 26% y/y to USD 125.4m in 4Q18, and the adjusted EBITDA for the quarter to grow 16% y/y to USD 71.9m from USD 61.9m in 4Q17. Our TCE revenue estimates are expected to increase at a CAGR of 12.1% to ~USD 520m in 2021 with recovery in vessel earnings. We estimate net profit close to USD 40m in 2019, which would expand to around USD 100m by 2021. We expect the company to resume dividend payments that will increase with growing profits. We assign a fair value of USD 6.75 per share and reiterate our Attractive stance on the back of a positive outlook for tanker shipping.</li></ul>


Earnings to improve; positive outlook in medium term: Frontline (FRO) reported net profit of USD 2.2m in 3Q18, compared with net loss of USD 24.1m in 3Q17. This was because the company’s VLCC fleet-realised TCE rates increased from USD 13,200pd in 3Q17 to USD 19,900pd in 3Q18; additionally there were other operating gains of USD 12.8m. For 4Q18, the company locked in 77% of its VLCC trading days at USD 34,000pd and 65% of the available Suezmax spot days at USD 24,000pd. Additionally, 59% of the LR2 days have been covered at USD 17,000pd. Freight rates could rise further in the remaining days of the quarter. We expect the TCE revenue to increase 26% y/y to USD 125.4m in 4Q18, and the adjusted EBITDA for the quarter to grow 16% y/y to USD 71.9m from USD 61.9m in 4Q17. Our TCE revenue estimates are expected to increase at a CAGR of 12.1% to ~USD 520m in 2021 with recovery in vessel earnings. We estimate net profit close to USD 40m in 2019, which would expand to around USD 100m by 2021. We expect the company to resume dividend payments that will increase with growing profits. We assign a fair value of USD 6.75 per share and reiterate our Attractive stance on the back of a positive outlook for tanker shipping.

Frontline – Earnings to Soar with Recovery in Tanker Shipping Space

<ul><li>
Earnings and profitability to expand with gradual recovery: Teekay Tankers’ (TNK’s) TCE revenues for 3Q18 increased 27.3% y/y to USD 92.2m on the back of an expanded fleet after Tanker Investment Limited’s (TIL’s) acquisition. The adjusted EBITDA surged 49.3% to USD 27.4m in 3Q18 from USD 18.5m in 3Q17. However, the company recorded a higher adjusted net loss of USD 17.5m in 3Q18, compared with the adjusted net loss of USD 14.6m in 3Q17. For 4Q18, TNK has fixed 59% of its Suezmax days at USD 19,000pd, 54% of its Aframax days at 19,900pd and 42% of its LR2 days at USD 17,000pd. Freight rates on these fixtures are relatively higher than the rates realised in 4Q17. We estimate TNK’s TCE revenue to expand 35.1% y/y to USD 114.5m, whereas we expect the adjusted EBITDA to surge 62.2% from USD 30.1m in 4Q17 to USD 48.9m in 4Q18. With a recovery in the tanker market, TNK’s TCE revenue estimates are expected to grow at a CAGR of 7.5% to ~USD 475m in 2021, whereas the adjusted EBITDA is estimated to surge from USD 114.5m in 2018 to USD 223m in 2021. Accordingly, we maintain our fair value estimate of USD 1.30 per share and reiterate our Attractive stance on the company’s stock.</li></ul>


Earnings and profitability to expand with gradual recovery: Teekay Tankers’ (TNK’s) TCE revenues for 3Q18 increased 27.3% y/y to USD 92.2m on the back of an expanded fleet after Tanker Investment Limited’s (TIL’s) acquisition. The adjusted EBITDA surged 49.3% to USD 27.4m in 3Q18 from USD 18.5m in 3Q17. However, the company recorded a higher adjusted net loss of USD 17.5m in 3Q18, compared with the adjusted net loss of USD 14.6m in 3Q17. For 4Q18, TNK has fixed 59% of its Suezmax days at USD 19,000pd, 54% of its Aframax days at 19,900pd and 42% of its LR2 days at USD 17,000pd. Freight rates on these fixtures are relatively higher than the rates realised in 4Q17. We estimate TNK’s TCE revenue to expand 35.1% y/y to USD 114.5m, whereas we expect the adjusted EBITDA to surge 62.2% from USD 30.1m in 4Q17 to USD 48.9m in 4Q18. With a recovery in the tanker market, TNK’s TCE revenue estimates are expected to grow at a CAGR of 7.5% to ~USD 475m in 2021, whereas the adjusted EBITDA is estimated to surge from USD 114.5m in 2018 to USD 223m in 2021. Accordingly, we maintain our fair value estimate of USD 1.30 per share and reiterate our Attractive stance on the company’s stock.

Teekay Tankers – Attractive Valuation Ahead of Recovery in Tanker Space

United States

Teekay Tankers Ltd. provides oil transportation services through a fleet of mid-size tankers, including Suezmax and Aframax crude oil tankers and Long Range 2 product tankers. The Company's vessels are typically employed through a mix of short- or medium-term fixed-rate time charter contracts and spot tanker market trading.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Teekay Tankers Ltd Class A (TNK US)

Volatility & Consolidation Continues; Buying Ag Chemicals, Aerospace/Defense, and Shipping Stocks

Moving forward we continue to expect more volatility and consolidation between 4257 and 4590-4595 on the S&P 500, and between $334 and $367 on the...

Vermilion Research

U.S. Equities: Test Of The Lows Coming?

Now that the initial/primary low has been established and with the S&P 500 roughly 20% off the lows, we believe it is time to map out potential...

Vermilion Research

U.S. Equity Strategy: Bullish Outlook Intact

Amid rising Middle East tensions, investors have moved to safe-havens including Treasuries and gold, all while having a muted effect on the US...

Vermilion Research

Frontline – Earnings to Soar with Recovery in Tanker Shipping Space

Earnings to improve; positive outlook in medium term: Frontline (FRO) reported net profit of USD 2.2m in 3Q18, compared with net loss of USD 24.1m...

Drewry Maritime Financial Research

Teekay Tankers – Attractive Valuation Ahead of Recovery in Tanker Space

Earnings and profitability to expand with gradual recovery: Teekay Tankers’ (TNK’s) TCE revenues for 3Q18 increased 27.3% y/y to USD 92.2m on the...

Drewry Maritime Financial Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)