European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for <a href="https://www.smartkarma.com/entities/applus-services-sa" target="_blank" data-smartkarma-citation="entities:21249:1" rel="noopener">Applus Services SA (APPS SM),</a> whose shares rose to €9.9, in the hope of a counter offer.</li>
<li>The market is capable of forcing Apollo to sweeten its proposal to reach 75% acceptances. Many risk arbitrageurs have positions in Applus and may not settle for the current premium.</li>
<li>This situation has been flagged for a while. If already long, it is worth holding for a possible better offer, which could come around €10/share, a 5.2% increase.</li>
</ul>


On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for Applus Services SA (APPS SM), whose shares rose to €9.9, in the hope of a counter offer.
The market is capable of forcing Apollo to sweeten its proposal to reach 75% acceptances. Many risk arbitrageurs have positions in Applus and may not settle for the current premium.
This situation has been flagged for a while. If already long, it is worth holding for a possible better offer, which could come around €10/share, a 5.2% increase.


Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Expect some upset on <a href="https://www.smartkarma.com/entities/sbi-shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">SBI Shinsei Bank (8303 JP)</a>'s Offer, the possibility of some activism, but it all plays out in the back end. Not the front end.</li>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a> is doing a large equity offering to get the monkey off its back with regard to over-leverage, near-term debt refinancing, and WC for Rakuten Mobile.</li>
<li>Fund manager <a href="https://www.smartkarma.com/entities/china-everbright-ltd" target="_blank" data-smartkarma-citation="entities:167:1" rel="noopener">China Everbright (165 HK)</a>'s implied stub and simple ratio (CEL / <a href="https://www.smartkarma.com/entities/everbright-securitie-co-a" target="_blank" data-smartkarma-citation="entities:15343:1" rel="noopener">Everbright Securities Co (A) (601788 CH)</a>) are at multi-year lows.</li>
</ul>


Expect some upset on SBI Shinsei Bank (8303 JP)'s Offer, the possibility of some activism, but it all plays out in the back end. Not the front end.

Rakuten (4755 JP) is doing a large equity offering to get the monkey off its back with regard to over-leverage, near-term debt refinancing, and WC for Rakuten Mobile.
Fund manager China Everbright (165 HK)'s implied stub and simple ratio (CEL / Everbright Securities Co (A) (601788 CH)) are at multi-year lows.


Last Week in Event SPACE: Shinsei Bank, China Everbright, Rakuten, Sony Corp

<ul>
<li>Applus has long been considered an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers &gt;13x) with no dominant shareholders on the register. Apollo, Apax and I Squared/TDR are circling.</li>
<li>My fair-value estimate ranges from €10.51/share (DCF) to €11.33/share (multiples, applying a discount to more profitable peers). There're two issues regarding a possible LBO: IDIADA contract and debt covenants.</li>
<li>Cost of debt would increase to &gt;4% and the buyer would have to negotiate a temporary increase of covenants to 5x EBITDA (probably in exchange of disposal of O&amp;G business). </li>
</ul>


Applus has long been considered an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers &gt;13x) with no dominant shareholders on the register. Apollo, Apax and I Squared/TDR are circling.
My fair-value estimate ranges from €10.51/share (DCF) to €11.33/share (multiples, applying a discount to more profitable peers). There're two issues regarding a possible LBO: IDIADA contract and debt covenants.
Cost of debt would increase to &gt;4% and the buyer would have to negotiate a temporary increase of covenants to 5x EBITDA (probably in exchange of disposal of O&amp;G business). 


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

Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.

Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) were able to shrug off recent news of a more contagious Covid variant that popped-up in the UK. Additionally, Covid fears have done nothing to derail ongoing positive market dynamics. As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying opportunity. Actionable Themes in today's report: Services, Technology, Manufacturing, and Materials.

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical picture. While there is some room to move higher in the near-term, we are hesitant to get too excited because several major indexes have additional hurdles to jump. We highlight important technical levels across major averages including Europe/UK (STOXX 600), Hong Kong (Hang Seng), Japan (TOPIX), and several EM countries (China, Brazil, Russia, Taiwan, and India).  Finally, we highlight attractive opportunities within the Consumer Discretionary, Heath Care and Services sectors.

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical picture. While there is some room to move higher in the near-term, we are hesitant to get too excited because several major indexes have additional hurdles to jump. We highlight important technical levels across major averages including Europe/UK (STOXX 600), Hong Kong (Hang Seng), Japan (TOPIX), and several EM countries (China, Brazil, Russia, Taiwan, and India).  Finally, we highlight attractive opportunities within the Consumer Discretionary, Heath Care and Services sectors.

Spain

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

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Applus Services SA (APPS SM)

Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage

On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for Applus, whose shares rose to €9.9, in the hope of a counter...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Shinsei Bank, China Everbright, Rakuten, Sony Corp

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

Take-Private Interest

Applus has been considered for some time an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers above 13x) with no dominant shareholders on...

Jesus Rodriguez Aguilar

Global Equity Strategy: Support Levels Holding; Bullish Outlook Intact

As long as support levels hold and market dynamics remain positive, our outlook remains bullish and we continue to view any weakness as a buying...

Vermilion Research

Global Equity Strategy: Guarded Optimism

Global equities (MSCI ACWI) are decisively breaking above 1-month resistance on US-China trade war optimism, incrementally improving the technical...

Vermilion Research

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