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

EURO STOXX 50 Price EUR / Technical Analysis

<ul>
<li>It appears the recent pullback is over, and we could see the MSCI ACWI (ACWI-US) test YTD highs at $93. We still expect $93 to cap upside in 2023.</li>
<li>Overweight Europe/UK and non-U.S., we are buyers on pullbacks as long as FTSE 100 is above 7700, STOXX Europe 50 is above 3800, and EURO STOXX 50 is above 4000.</li>
<li>As long as these support levels are holding, we are constructive from a price perspective</li>
</ul>


It appears the recent pullback is over, and we could see the MSCI ACWI (ACWI-US) test YTD highs at $93. We still expect $93 to cap upside in 2023.
Overweight Europe/UK and non-U.S., we are buyers on pullbacks as long as FTSE 100 is above 7700, STOXX Europe 50 is above 3800, and EURO STOXX 50 is above 4000.
As long as these support levels are holding, we are constructive from a price perspective


Remain Overweight Europe/UK & Non-US Equities; Pullback Over?; Buys in Industrials and Financials

iShares MSCI China ETF / Technical Analysis

<ul>
<li>We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.</li>
<li>We continue to expect rangebound price action in the months ahead on the MSCI ACWI.</li>
<li>And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)</li>
</ul>


We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.
We continue to expect rangebound price action in the months ahead on the MSCI ACWI.
And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)


Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Siemens Gamesa Renewable Energy, S.A. / Event-Driven

<ul>
<li>After the end of the offer period, Siemens Energy will hold 631,538,509 shares of Siemens Gamesa, representing 92.72% of the share capital (below the 96.71% squeeze-out threshold condition).</li>
<li>Siemens Energy will execute plan B: a standing purchase order beginning 23 December followed by an EGM that will approve delisting.</li>
<li>Unicaja Banco SA (UNI SM) will replace Siemens Gamesa in the Ibex 35 index. Talgo (TLGO SM) will replace Unicaja in the Ibex Medium Cap.</li>
</ul>


After the end of the offer period, Siemens Energy will hold 631,538,509 shares of Siemens Gamesa, representing 92.72% of the share capital (below the 96.71% squeeze-out threshold condition).
Siemens Energy will execute plan B: a standing purchase order beginning 23 December followed by an EGM that will approve delisting.
Unicaja Banco SA (UNI SM) will replace Siemens Gamesa in the Ibex 35 index. Talgo (TLGO SM) will replace Unicaja in the Ibex Medium Cap.


<a href="https://www.smartkarma.com/entities/unicaja-banco-sa" target="_blank" data-smartkarma-citation="entities:28379:1" rel="noopener">Unicaja Banco SA (UNI SM)</a> and <a href="https://www.smartkarma.com/entities/liberbank-sa" target="_blank" data-smartkarma-citation="entities:21279:1" rel="noopener">Liberbank SA (LBK SM)</a> will soon finalize their merger after receiving all the authorisations. On 19 July, the Spanish Government gave the green-light to the integration, which is expected to close on 30 July.
<div>
Unicaja, as the purchasing entity, plans to issue around 1,075 million new shares to meet the agreed exchange ratio (2.7705 LBK SM x 1 UNI SM). Unicaja will have a holding of 59.5% in the new bank, while the remaining 40.5% will be distributed among Liberbank shareholders.
<div>
Unicaja will become the fifth largest domestic bank, with assets totaling c. €110 bn, 9,000 employees and 1,554 branches (of which 300 will be closed). Unicaja will record a "badwill" of €2,015 mn in the merger with Liberbank (which trades well below its BV), and will use it to cover the cost of reducing the workforce.
Liberbank's shares are trading at a 0.8% discount (adjusted for the merger ratio).
<ul>
<li>The all-share merger will see Unicaja absorb Liberbank at an exchange ratio of 2.7705 Liberbank shares for 1 Unicaja share.</li>
</ul>
</div>
Although liquidity is thin, recommendation is short UNI SM/long LBK SM. Effective merger is highly likely to happen on 30 July.
</div>

Unicaja Banco SA (UNI SM) and Liberbank SA (LBK SM) will soon finalize their merger after receiving all the authorisations. On 19 July, the Spanish Government gave the green-light to the integration, which is expected to close on 30 July.

Unicaja, as the purchasing entity, plans to issue around 1,075 million new shares to meet the agreed exchange ratio (2.7705 LBK SM x 1 UNI SM). Unicaja will have a holding of 59.5% in the new bank, while the remaining 40.5% will be distributed among Liberbank shareholders.

Unicaja will become the fifth largest domestic bank, with assets totaling c. €110 bn, 9,000 employees and 1,554 branches (of which 300 will be closed). Unicaja will record a "badwill" of €2,015 mn in the merger with Liberbank (which trades well below its BV), and will use it to cover the cost of reducing the workforce.
Liberbank's shares are trading at a 0.8% discount (adjusted for the merger ratio).

The all-share merger will see Unicaja absorb Liberbank at an exchange ratio of 2.7705 Liberbank shares for 1 Unicaja share.


Although liquidity is thin, recommendation is short UNI SM/long LBK SM. Effective merger is highly likely to happen on 30 July.


On 29 December, the Boards of <a href="https://www.smartkarma.com/entities/unicaja-banco-sa" target="_blank" data-smartkarma-citation="entities:28379:1" rel="noopener">Unicaja Banco SA (UNI SM)</a> and <a href="https://www.smartkarma.com/entities/liberbank-sa" target="_blank" data-smartkarma-citation="entities:21279:1" rel="noopener">Liberbank SA (LBK SM)</a> approved at last the merger of both entities. Unicaja, which will absorb Liberbank, will control 59.5% of the resulting entity, while Liberbank will have the remaining 40.5%. On 30 December, the deal presentation took place.
Unicaja + Liberbank will have combined assets pro-forma over €108.9 bn and will become the fifth biggest bank operating in Spain.
The exchange ratio is 0.360845 Unicaja shares per Liberbank share.
<ul>
<li>0.24x implied equity value/BV, 10.4x deal value/EPS (trailing four quarters) and 24.8x deal value/tangible equity upon announcement (25.0x last close).</li>
</ul>
Cost savings are the cornerstone of the project. Unicaja and Liberbank plan to close up to 20% of the branch network. The combined entity expects to have recurring cost savings of approximately €192 mn per year (fully from 2023), which will allow a "significant" improvement in the efficiency ratio by 11 percentage points. The generation of synergies will make it possible to increase EPS by approximately 50% compared to 2023 analysts' estimates.
<ul>
<li>Restructuring costs could reach around €400-500 mn. But now the banks have a stronger capital position to face them. Unicaja's top quality capital ratio is 14.4% and Liberbank's is 14%. Both entities could use their excess capital from 11.5% to increase provisions and improve their coverage rates.</li>
</ul>
This merger has all the chances to succeed, and should close in six to seven months. According to market consensus, it is a win-win textbook operation.
Following the recent drop in the share price of Liberbank, the gross spread is -2.3%. 
Recommendation is Long 1.0 Liberbank/short 0.360845 Unicaja shares.

On 29 December, the Boards of Unicaja Banco SA (UNI SM) and Liberbank SA (LBK SM) approved at last the merger of both entities. Unicaja, which will absorb Liberbank, will control 59.5% of the resulting entity, while Liberbank will have the remaining 40.5%. On 30 December, the deal presentation took place.
Unicaja + Liberbank will have combined assets pro-forma over €108.9 bn and will become the fifth biggest bank operating in Spain.
The exchange ratio is 0.360845 Unicaja shares per Liberbank share.

0.24x implied equity value/BV, 10.4x deal value/EPS (trailing four quarters) and 24.8x deal value/tangible equity upon announcement (25.0x last close).

Cost savings are the cornerstone of the project. Unicaja and Liberbank plan to close up to 20% of the branch network. The combined entity expects to have recurring cost savings of approximately €192 mn per year (fully from 2023), which will allow a "significant" improvement in the efficiency ratio by 11 percentage points. The generation of synergies will make it possible to increase EPS by approximately 50% compared to 2023 analysts' estimates.

Restructuring costs could reach around €400-500 mn. But now the banks have a stronger capital position to face them. Unicaja's top quality capital ratio is 14.4% and Liberbank's is 14%. Both entities could use their excess capital from 11.5% to increase provisions and improve their coverage rates.

This merger has all the chances to succeed, and should close in six to seven months. According to market consensus, it is a win-win textbook operation.
Following the recent drop in the share price of Liberbank, the gross spread is -2.3%. 
Recommendation is Long 1.0 Liberbank/short 0.360845 Unicaja shares.

Spain

Unicaja Banco, S.A. provides banking services. The Bank offers deposits, personal loans, e-banking, trade finance, foreign exchange, pension plans, securities, cards, insurance, and asset management services. Unicaja Banco serves customers in Spain.

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Unicaja Banco SA (UNI SM)

Remain Overweight Europe/UK & Non-US Equities; Pullback Over?; Buys in Industrials and Financials

Remain overweight Europe/UK and non-US equities; we are buyers on pullbacks as long as the FTSE 100 is above 7700, the STOXX Europe 50 is above...

Vermilion Research

Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

We remain neutral on global equities $ACWI and expect rangebound price action in the months (possibly year) ahead. Specific $ACWI trading range we...

Vermilion Research

Siemens Energy/Siemens Gamesa: Delisting

After the end of the offer period, Siemens Energy will hold 631,538,509 shares of Siemens Gamesa, representing 92.72% of the share capital (below...

Jesus Rodriguez Aguilar

Unicaja/Liberbank: Final Stretch

Liberbank's shares are trading at a 0.8% discount (adjusted for the merger ratio).Albeit liquidity is thin, recommendation is short Unicaja/long...

Jesus Rodriguez Aguilar

Liberbank - Unicaja Agreed Merger

This defensive merger has all the chances to succeed, and should close in six to seven months. It is a win-win textbook operation. Gross spread is ...

Jesus Rodriguez Aguilar

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