Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Equity Bottom-Up

Our negative view on <a href="https://www.smartkarma.com/entities/24184" target="_blank" data-smartkarma-citation="entities:24184:1">Baozun Inc. (BZUN US)</a> stems from the company’s declining profit margin due to eroding pricing power to key customers, and chronic negative cash flow despite robust GMV growth.  The root cause of the problem is the strengthening of bargaining power from its key existing clients, as they demand fixed fees, rather than GMV based commission fees as online sales increases.  Many service contracts are renewable each year, and we see a weakening pricing trend as well as a bloated balance sheet as its distribution business re-accelerates growth.  An increasing distribution business sales mix implies rising inventory, which adds strain to working capital.   Unsurprisingly, on April 4th Baozun announced a convertible debt offering of $225M due in 2024, to primarily fund its working capital.

Our negative view on Baozun Inc. (BZUN US) stems from the company’s declining profit margin due to eroding pricing power to key customers, and chronic negative cash flow despite robust GMV growth.  The root cause of the problem is the strengthening of bargaining power from its key existing clients, as they demand fixed fees, rather than GMV based commission fees as online sales increases.  Many service contracts are renewable each year, and we see a weakening pricing trend as well as a bloated balance sheet as its distribution business re-accelerates growth.  An increasing distribution business sales mix implies rising inventory, which adds strain to working capital.   Unsurprisingly, on April 4th Baozun announced a convertible debt offering of $225M due in 2024, to primarily fund its working capital.

BZUN Q1 Preview: Eroding GMV Quality, Margin Squeeze by Top Customers

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

This report highlights actionable set ups from predominately European, developed markets, and is supportive of our view that Europe is bottoming, a viewpoint that remains far from consensus. Within Europe, we put a spotlight on Germany’s DAX and France’s CAC 40. Today’s recommendations are primarily from cyclical Sectors, however European Consumer Staples also exhibits bottoming RS.

This report highlights actionable set ups from predominately European, developed markets, and is supportive of our view that Europe is bottoming, a viewpoint that remains far from consensus. Within Europe, we put a spotlight on Germany’s DAX and France’s CAC 40. Today’s recommendations are primarily from cyclical Sectors, however European Consumer Staples also exhibits bottoming RS. 

Developed Markets Chart Book: Europe in Focus

LVMH Moet Hennessy Louis Vuitton SE / Technical Analysis

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal &amp; Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory &amp; Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal &amp; Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory &amp; Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.

European Apparel, Accessory & Luxury Goods Stocks Are Heating Up -- Add Exposure

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

A consortium led by <a href="https://www.smartkarma.com/entities/10261" target="_blank" data-smartkarma-citation="entities:10261:1">Anta Sports Products (2020 HK)</a> launched a recommended public cash tender offer for <a href="https://www.smartkarma.com/entities/21751" target="_blank" data-smartkarma-citation="entities:21751:1">Amer Sports Oyj (AMEAS FH)</a> last Friday. The tender offer of €40 per share values Amer Sports at an EV of €5.5 billion. The proposed acquisition would be the largest outbound deal into Europe by a Chinese company in 2018. If successful, the deal would mark the culmination of a multi-month negotiation that has seen Amer Sports resist the advances of ANTA Sports as it preferred to stay independent.<div class="content-highlight">Our analysis suggests that the proposed acquisition and deal structure is good for Amer Sports’ shareholders and FountainVest. However, ANTA Sports' shareholders appear to be getting the short end of the stick.</div>

A consortium led by Anta Sports Products (2020 HK) launched a recommended public cash tender offer for Amer Sports Oyj (AMEAS FH) last Friday. The tender offer of €40 per share values Amer Sports at an EV of €5.5 billion. The proposed acquisition would be the largest outbound deal into Europe by a Chinese company in 2018. If successful, the deal would mark the culmination of a multi-month negotiation that has seen Amer Sports resist the advances of ANTA Sports as it preferred to stay independent.Our analysis suggests that the proposed acquisition and deal structure is good for Amer Sports’ shareholders and FountainVest. However, ANTA Sports' shareholders appear to be getting the short end of the stick.

ANTA/Amer: Good Deal for Amer and FountainVest, a Poor Deal for ANTA

MSCI Emerging Markets Index / Technical Analysis

Bullish technicals continue to support our call to overweight EM. We highlight actionable themes, as well as pullback opportunities in Europe, European luxury/apparel, UK homebuilders, EM chemicals, Japanese chemicals, and Japanese tech stocks.

Bullish technicals continue to support our call to overweight EM. We highlight actionable themes, as well as pullback opportunities in Europe, European luxury/apparel, UK homebuilders, EM chemicals, Japanese chemicals, and Japanese tech stocks.

Int'l Compass: Overweight EM; Actionable Themes in Europe and Japan

Germany

Puma SE designs, manufactures, and sells sporting goods and apparels. The Company produces running, tennis, training, and basketball shoes, as well as t-shirts and accessories. Puma serves customers worldwide.

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Puma (PUM GR)

BZUN Q1 Preview: Eroding GMV Quality, Margin Squeeze by Top Customers

Our negative view on Baozun Inc. (BZUN US) stems from the company’s declining profit margin due to eroding pricing power to key customers, and...

JL Warren Capital

Developed Markets Chart Book: Europe in Focus

This report highlights actionable set ups from predominately European, developed markets, and is supportive of our view that Europe is bottoming, a...

Vermilion Research

European Apparel, Accessory & Luxury Goods Stocks Are Heating Up -- Add Exposure

We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend....

Vermilion Research

ANTA/Amer: Good Deal for Amer and FountainVest, a Poor Deal for ANTA

A consortium led by Anta Sports Products (2020 HK) launched a recommended public cash tender offer for Amer Sports Oyj (AMEAS FH) last Friday. The...

Arun George

Int'l Compass: Overweight EM; Actionable Themes in Europe and Japan

Bullish technicals continue to support our call to overweight EM. We highlight actionable themes, as well as pullback opportunities in Europe,...

Vermilion Research

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