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

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Global Equities (ACWI-US) Likely to Retest the March Low

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low - and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. In this report we highlight key technical levels and indicators to watch and suggest investment opportunities with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the same time, after this type of major waterfall decline there is often a test of this initial low - and oftentimes we get an undercut of the initial low. Barring approval of a first-line therapy for COVID-19 we are of the belief that we will get an eventual test of this initial low and potentially an undercut. In this report we highlight key technical levels and indicators to watch and suggest investment opportunities with defensive and/or growth characteristics. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Global Equity Strategy: Initial Low Established

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a>'s 1H24 result is impressive with a 58% YoY increase in adjusted net profit. Good cost control is a key contributing factor. </li>
<li>Profitability has improved in all business segments. Its strategy to focus on higher-value courses has led to further improvement in annualised tuition per student. </li>
<li>The 1H24 result equals 68% of the full-year consensus, implying an upside in market expectations. Its net cash, at 35% of market capitalisation, is unmatched by peers.</li>
</ul>



China East Education (667 HK)'s 1H24 result is impressive with a 58% YoY increase in adjusted net profit. Good cost control is a key contributing factor. 
Profitability has improved in all business segments. Its strategy to focus on higher-value courses has led to further improvement in annualised tuition per student. 
The 1H24 result equals 68% of the full-year consensus, implying an upside in market expectations. Its net cash, at 35% of market capitalisation, is unmatched by peers.


China East Education (667 HK): Rock Solid Improvements

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outflows, and holding by mainland investors.</li>
<li>We highlight inflows into CCB, Alibaba, China Mobile, ICBC, ABC.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight inflows into CCB, Alibaba, China Mobile, ICBC, ABC.


Hong Kong Connect Flows (December): $10.7bn Inflows Led by Banks

China New Higher Education / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-new-university" target="_blank" data-smartkarma-citation="entities:23626:1" rel="noopener">China New Higher Education (2001 HK)</a> has rebounded by 40% from its post-result trough but was still down by 34% from the pre-FY24 result level, despite healthy FY24 results.</li>
<li>Net profit is healthy, but it is the all-scrip final dividends that dragged on the share price. Concerns are on higher gearing, but at 69.9%, this is still acceptable. </li>
<li>The consensus earnings forecast of a 6% growth in FY25 and FY26 seems not excessive. At 2.2x PER and 22% yield for FY25, it seems worthy of the risks.</li>
</ul>



China New Higher Education (2001 HK) has rebounded by 40% from its post-result trough but was still down by 34% from the pre-FY24 result level, despite healthy FY24 results.
Net profit is healthy, but it is the all-scrip final dividends that dragged on the share price. Concerns are on higher gearing, but at 69.9%, this is still acceptable. 
The consensus earnings forecast of a 6% growth in FY25 and FY26 seems not excessive. At 2.2x PER and 22% yield for FY25, it seems worthy of the risks.


China New Higher Education (2001 HK): 2.2x PE, 22% Yield, Worth Taking the Risk?

China

XJ International Holdings Co., Ltd. is an investment holding company primarily engaged in providing higher education and secondary vocational education services. The company offers technician education and training, self-study examination, adult education, and technical management and consultancy services, alongside selling textbooks and dormitory bedding. It operates colleges, universities, junior colleges, and technician colleges across China, Malaysia, Thailand, and Hungary. The company was founded in 2007 and is headquartered in Chengdu, the People's Republic of China.

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XJ International (1765 HK)

Global Equities (ACWI-US) Likely to Retest the March Low

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the...

Vermilion Research

Global Equity Strategy: Initial Low Established

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the...

Vermilion Research

China East Education (667 HK): Rock Solid Improvements

China East Education’s FY24 earnings of Rmb512.6m (+88%) beat the consensus forecast (Rmb419.5m) by a significant margin. Its 2H24 adjusted net...

Osbert Tang, CFA

Hong Kong Connect Flows (December): $10.7bn Inflows Led by Banks

We analyzed the Hong Kong Connect Scheme for December and highlighted flows for CCB, Alibaba, China Mobile, ICBC, ABC, Meituan, Kuaishou, Wuxi...

Ke Yan, CFA, FRM

China New Higher Education (2001 HK): 2.2x PE, 22% Yield, Worth Taking the Risk?

China New Higher Education sees a 40% share price rebound from the post-result trough but is still down 34% from pre-FY24 result levels. Concerns...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Global Equities (ACWI-US) Likely to Retest the March Low

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the...

Vermilion Research

Global Equity Strategy: Initial Low Established

Several equity indexes and indicators we watch are telling us an initial primary low has been established for global equities (ACWI-US). At the...

Vermilion Research

China East Education (667 HK): Rock Solid Improvements

China East Education’s FY24 earnings of Rmb512.6m (+88%) beat the consensus forecast (Rmb419.5m) by a significant margin. Its 2H24 adjusted net...

Osbert Tang, CFA

Hong Kong Connect Flows (December): $10.7bn Inflows Led by Banks

We analyzed the Hong Kong Connect Scheme for December and highlighted flows for CCB, Alibaba, China Mobile, ICBC, ABC, Meituan, Kuaishou, Wuxi...

Ke Yan, CFA, FRM

China New Higher Education (2001 HK): 2.2x PE, 22% Yield, Worth Taking the Risk?

​China New Higher Education sees a 40% share price rebound from the post-result trough but is still down 34% from pre-FY24 result levels. Concerns...

Osbert Tang, CFA

China New Higher Education sees a 40% share price rebound from the post-result trough but is still down 34% from pre-FY24 result levels. Concerns...