European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<div>
<div id="tw-ob">
<div id="tw-target">
<div id="kAz1tf">
<p>On 4 February, Daimler announced the spin-off of the truck division. It will list Daimler Trucks before the end of 2021 and distribute a majority stake to Daimler shareholders. From that moment on, Daimler will be renamed Mercedes-Benz.</p>
<p>This operation had been the subject of much speculation in the past, considering that segmenting both the passenger and the commercial vehicle business would offer a higher valuation of each of them. However, Daimler had been reluctant. This move makes sense, in my view.</p>
<p>It will enable Mercedes-Benz's strategy to focus on electrification and self-driving, areas in which other competitors (BMW, for example) are more advanced. Daimler Trucks will focus on improving margins and profitability while focusing on the development of other technologies (hydrogen fuel cell) as an alternative to the traditional combustion engine.</p>
</div>
<p>Taking into account the multiples of other competitors, the valuation of Daimler Trucks could reach around €30 bn - €35 bn, according to consensus.</p>
<p>I value Daimler as a SOTP and obtain a <strong>value per share of €71.86</strong>.</p>
<ul>
<li>Considering the multiples of Volvo and Traton, the valuation of Daimler Trucks could reach up to €38.7 bn before debt, although it would need to significantly improve its returns to achieve that valuation.</li>
<li>The conglomerate discount of Daimler should reduce as the spin-off gets closer.</li>
<li>Corporate restructuring will be a catalyst for the stock price, in my view.</li>
<li>Moreover, a spin-off is shareholder friendly as a minority IPO (say the plans of Repsol Renewables) usually represent a limited valuation upside for the parent.</li>
</ul>
<div>
<p>Recommendation is <strong>Long DAI GR</strong>, <strong>TP €71.86</strong>.</p>
</div>
<div>The reorganisation announcement triggered the price of Daimler, which rose 8.9%, to reach a market cap of €67.6 bn.</div>
</div>
</div>
<div id="tw-images"></div>
<div></div>
<div>
<div></div>
</div>
</div>
<p><br><br></p>





On 4 February, Daimler announced the spin-off of the truck division. It will list Daimler Trucks before the end of 2021 and distribute a majority stake to Daimler shareholders. From that moment on, Daimler will be renamed Mercedes-Benz.
This operation had been the subject of much speculation in the past, considering that segmenting both the passenger and the commercial vehicle business would offer a higher valuation of each of them. However, Daimler had been reluctant. This move makes sense, in my view.
It will enable Mercedes-Benz's strategy to focus on electrification and self-driving, areas in which other competitors (BMW, for example) are more advanced. Daimler Trucks will focus on improving margins and profitability while focusing on the development of other technologies (hydrogen fuel cell) as an alternative to the traditional combustion engine.

Taking into account the multiples of other competitors, the valuation of Daimler Trucks could reach around €30 bn - €35 bn, according to consensus.
I value Daimler as a SOTP and obtain a value per share of €71.86.

Considering the multiples of Volvo and Traton, the valuation of Daimler Trucks could reach up to €38.7 bn before debt, although it would need to significantly improve its returns to achieve that valuation.
The conglomerate discount of Daimler should reduce as the spin-off gets closer.
Corporate restructuring will be a catalyst for the stock price, in my view.
Moreover, a spin-off is shareholder friendly as a minority IPO (say the plans of Repsol Renewables) usually represent a limited valuation upside for the parent.


Recommendation is Long DAI GR, TP €71.86.

The reorganisation announcement triggered the price of Daimler, which rose 8.9%, to reach a market cap of €67.6 bn.








  

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<div>
<p>This week in StubWorld ...</p>
<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> plumbs a new discount to NAV low after <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Auto (708 HK)</a>'s meteoric post-placement gain; <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> discount to NAV retraces, as expected; and <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> still look cheap versus its sum of parts.</p>
</div>
</div>
<hr>
<div>
<p>Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>


This week in StubWorld ...

Evergrande Real Estate Group (3333 HK) plumbs a new discount to NAV low after Evergrande Auto (708 HK)'s meteoric post-placement gain; PCCW Ltd (8 HK) discount to NAV retraces, as expected; and LG Corp (003550 KS) still look cheap versus its sum of parts.




Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Evergrande Auto, PCCW, LG Corp

Travis Lundy

<p>The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. </p><p>When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. </p><p>My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.</p><p>Which is a lot.</p><p>The arithmetic, and an explanation of why it matters, follow.</p>

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

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

<p>Our outlook remains bullish and we continue to believe that the path of least resistance is higher for global equities. We see global equities as being in a goldilocks scenario where market dynamics and technicals are arguably 100% bullish. Of course, at some point this almost too good to be true scenario is likely to result in a pullback, but for now we see no signs of this rally letting up.  In our December International Strategy, we highlight areas of the market where we see actionable opportunities in Technology, Consumer Discretionary, Materials and Manufacturing.</p>

Our outlook remains bullish and we continue to believe that the path of least resistance is higher for global equities. We see global equities as being in a goldilocks scenario where market dynamics and technicals are arguably 100% bullish. Of course, at some point this almost too good to be true scenario is likely to result in a pullback, but for now we see no signs of this rally letting up.  In our December International Strategy, we highlight areas of the market where we see actionable opportunities in Technology, Consumer Discretionary, Materials and Manufacturing.

Global Equity Strategy: Bullish Outlook Intact

<p style="text-align: justify;">In our November Strategy book we summarize the basis for our bullish outlook, discuss the deservedly hot topic of value vs. growth. and highlight actionable opportunities within our <span>Manufacturing, Transportation, M</span>aterials, Technology, &amp; Consumer Discretionary Sectors.</p>

In our November Strategy book we summarize the basis for our bullish outlook, discuss the deservedly hot topic of value vs. growth. and highlight actionable opportunities within our Manufacturing, Transportation, Materials, Technology, &amp; Consumer Discretionary Sectors.

Germany

Mercedes-Benz Group AG operates as an automobile company. The Company designs, manufactures, distributes, and sells a wide range of automotive products such as passenger cars, trucks, vans, and buses. Mercedes-Benz Group also provides financial and other services relating to its automotive businesses.

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

Mercedes-Benz Group (MBG GR)

Daimler Spin-Off

I value Daimler as a SOTP. The conglomerate discount should reduce as the spin-off gets closer. Moreover, a spin-off is shareholder friendly. Long...

Jesus Rodriguez Aguilar

StubWorld: Evergrande Auto, PCCW, LG Corp

Chine Evergrande (3333 HK) looks "cheap" and Evergrande Auto (708 HK) frothy, suggesting a set-up here. Personally, I would avoid both.

David Blennerhassett

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

Global Equity Strategy: Bullish Outlook Intact

Our outlook remains bullish and we continue to believe that the path of least resistance is higher for global equities. In this report, we...

Vermilion Research

U.S. Equity Strategy: Remain Bullish

In our November Strategy book we summarize the basis for our bullish outlook, discuss the deservedly hot topic of value vs. growth. and highlight...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)