Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Shinko Electric Industries / Event-Driven

<ul>
<li>If <a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1" rel="noopener">Descente Ltd (8114 JP)</a> earnings disappoints, buy the dip. <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> is buying for the long-term.</li>
<li>
<a href="https://www.smartkarma.com/entities/mgm-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:472:1" rel="noopener">MGM China Holdings (2282 HK)</a> has gained market share in mass table market, VIP, and total revenue. Yet MGM's FY24E EV/EBITDA is ~40% below its two-year forward average EV/EBITDA pre-Covid.</li>
<li>If you had a J-REIT portfolio, <a href="https://www.smartkarma.com/entities/sankei-real-estate-inc" target="_blank" data-smartkarma-citation="entities:35239:1" rel="noopener">Sankei Real Estate (2972 JP)</a> would go in and push something else out or smaller. I think one gets beta-plus, which is usually called alpha.</li>
</ul>


If Descente Ltd (8114 JP) earnings disappoints, buy the dip. Itochu Corp (8001 JP) is buying for the long-term.

MGM China Holdings (2282 HK) has gained market share in mass table market, VIP, and total revenue. Yet MGM's FY24E EV/EBITDA is ~40% below its two-year forward average EV/EBITDA pre-Covid.
If you had a J-REIT portfolio, Sankei Real Estate (2972 JP) would go in and push something else out or smaller. I think one gets beta-plus, which is usually called alpha.


Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<ul>
<li>On 17 October, <a href="https://www.smartkarma.com/entities/autonation-inc" target="_blank" data-smartkarma-citation="entities:16548:1" rel="noopener">Autonation Inc (AN US)</a> also withdrew its proposal for <a href="https://www.smartkarma.com/entities/pendragon-plc" target="_blank" data-smartkarma-citation="entities:22080:1" rel="noopener">Pendragon PLC (PDG LN)</a>. Lithia's deal is likely to obtain shareholder's approval, for lack of a better offer.</li>
<li>Holding on would mean receiving 24.5p and staying in a small cap SaaS, whose shares are implicitly valued at 6.5p, instead of the 10.9p that Pendragon claims it is worth.</li>
<li>Readacross: Hedin, AutoNation, or someone else, could take a closer look at <a href="https://www.smartkarma.com/entities/vertu-motors-plc" target="_blank" data-smartkarma-citation="entities:23247:1" rel="noopener">Vertu Motors (VTU LN)</a>.</li>
</ul>


On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia's deal is likely to obtain shareholder's approval, for lack of a better offer.
Holding on would mean receiving 24.5p and staying in a small cap SaaS, whose shares are implicitly valued at 6.5p, instead of the 10.9p that Pendragon claims it is worth.
Readacross: Hedin, AutoNation, or someone else, could take a closer look at Vertu Motors (VTU LN).


<ul>
<li>The deal looked dead in the water during a week until, on 27 July, Global Auto Holdings raised its offer for <a href="https://www.smartkarma.com/entities/lookers-plc" target="_blank" data-smartkarma-citation="entities:22031:1" rel="noopener">Lookers PLC (LOOK LN)</a> by 8%, to 130p/share (46.6% premium).</li>
<li>The increased offer will now be carried out via takeover, and represents an implied EV of £968 million, 6.1x EV/Fwd NTM EBITDA and 9x Fwd P/E (on latest Consensus figures).</li>
<li>Considering the number of failed deals in the sector, I believe the offer looks very decent and the deal should now close. Spread is 5.2%/23.7% (gross /annualised). Long. </li>
</ul>


The deal looked dead in the water during a week until, on 27 July, Global Auto Holdings raised its offer for Lookers PLC (LOOK LN) by 8%, to 130p/share (46.6% premium).
The increased offer will now be carried out via takeover, and represents an implied EV of £968 million, 6.1x EV/Fwd NTM EBITDA and 9x Fwd P/E (on latest Consensus figures).
Considering the number of failed deals in the sector, I believe the offer looks very decent and the deal should now close. Spread is 5.2%/23.7% (gross /annualised). Long. 


Alpha Auto Group/​​Lookers: Sharp Turn

<ul>
<li>Long expected consolidation is arriving to UK car retailers. Alpha Auto agreed to acquire  <a href="https://www.smartkarma.com/entities/lookers-plc" target="_blank" data-smartkarma-citation="entities:22031:1" rel="noopener">Lookers PLC (LOOK LN)</a> via scheme at 120p/share, c.£465.4 million, 35.3% premium, 8.4x Fwd P/E.</li>
<li>The sector appears materially undervalued, with Lookers before announcement on 6.2x Fwd P/E, 4% FY23e yield (4x cover). My fair value estimate is 143p/share (multiples and DCF), 19% above offer price. </li>
<li>Spread 1.17%/4.32% (gross/annualised, assuming settlement around 1 October). Top shareholders have only signed letters of intent (40% aggregate). I'd be long in case of sweetening. VTU LN could be next.</li>
</ul>


Long expected consolidation is arriving to UK car retailers. Alpha Auto agreed to acquire  Lookers PLC (LOOK LN) via scheme at 120p/share, c.£465.4 million, 35.3% premium, 8.4x Fwd P/E.
The sector appears materially undervalued, with Lookers before announcement on 6.2x Fwd P/E, 4% FY23e yield (4x cover). My fair value estimate is 143p/share (multiples and DCF), 19% above offer price. 
Spread 1.17%/4.32% (gross/annualised, assuming settlement around 1 October). Top shareholders have only signed letters of intent (40% aggregate). I'd be long in case of sweetening. VTU LN could be next.


Alpha Auto Group/Lookers: Consolidation at a Cheap Offer Price

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

Nasdaq-100 Stock Index / Technical Analysis

In today’s report we outline  our belief that the combination of extreme oversold conditions and several key sectors/industries holding above major long-term support lead us to believe an important bottom has been established. We also highlight attractive Groups and stocks within Staples, Financials, and Health Care: Large- &amp; Small-Cap Soft Drinks &amp; Bottlers, Electronic Exchanges/Markets, and Large- and Mid-Cap Biotech.

In today’s report we outline  our belief that the combination of extreme oversold conditions and several key sectors/industries holding above major long-term support lead us to believe an important bottom has been established. We also highlight attractive Groups and stocks within Staples, Financials, and Health Care: Large- &amp; Small-Cap Soft Drinks &amp; Bottlers, Electronic Exchanges/Markets, and Large- and Mid-Cap Biotech.

A Bottom Has Been Established; Possible Retest?

United Kingdom

Vertu Motor plc operates as an automotive retailer in the United Kingdom. It sells new cars, motorcycles, commercial vehicles, and used vehicles, as well as provides related aftersales services. It operates a chain of franchised motor dealerships offering sales, service, parts, and bodyshop facilities for new and used cars, and commercial vehicles under the Bristol Street Motors and Macklin Motors brand names. Its franchise dealerships include Volvo, Volkswagen, Land Rover, Jaguar, and Honda. It also operates as a pension scheme trustee; and provides vehicle financing and related insurance products, as well as is involved in the property and online parts retailing businesses. As of May 11, 2016, the company operated a network of 127 sales outlets. Vertu Motor plc was founded in 2006 and is based in Gateshead, the United Kingdom.

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Vertu Motors (VTU LN)

Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

AutoNation Drops from the Race

On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia's deal is likely to obtain shareholder's...

Jesus Rodriguez Aguilar

Alpha Auto Group/Lookers: Sharp Turn

After the deal looked dead in the water, the board of Bidco and the board of Lookers announced that they had agreed on an increased recommended...

Jesus Rodriguez Aguilar

Alpha Auto Group/Lookers: Consolidation at a Cheap Offer Price

The car retail business in the UK is extremely fragmented, with minimal entry barriers, resulting in strong rivalry and poor profitability. Lookers...

Jesus Rodriguez Aguilar

A Bottom Has Been Established; Possible Retest?

In today’s report we outline our belief that the combination of extreme oversold conditions and several key sectors/industries holding above major...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

AutoNation Drops from the Race

On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia's deal is likely to obtain shareholder's...

Jesus Rodriguez Aguilar

Alpha Auto Group/​​Lookers: Sharp Turn

After the deal looked dead in the water, the board of Bidco and the board of Lookers announced that they had agreed on an increased recommended...

Jesus Rodriguez Aguilar

Alpha Auto Group/Lookers: Consolidation at a Cheap Offer Price

The car retail business in the UK is extremely fragmented, with minimal entry barriers, resulting in strong rivalry and poor profitability. Lookers...

Jesus Rodriguez Aguilar

A Bottom Has Been Established; Possible Retest?

In today’s report we outline our belief that the combination of extreme oversold conditions and several key sectors/industries holding above major...

Vermilion Research

Alpha Auto Group/Lookers: Sharp Turn