European Event-Driven Analyst

Jesus Rodriguez Aguilar

Equity Bottom-Up

Naturgy Energy Group SA / Equity Bottom-Up

<ul>
<li>S&amp;P has raised <a href="https://www.smartkarma.com/entities/naturgy-energy-group-sa" target="_blank" data-smartkarma-citation="entities:21271:1" rel="noopener">Naturgy Energy Group SA (NTGY SM)</a>'s credit outlook from negative to stable considering that the company may not finally carry out the Gemini spin-off project.</li>
<li>Naturgy's shares do not trade on fundamentals, rather on expectations that IFM tries to increase its stake (free float is just 15%). There's some potential overhang risk though.</li>
<li>IFM has not acquired any significant stake since April, but I would not short the shares as IFM could resume share purchases on an opportunistic basis.</li>
</ul>


S&amp;P has raised Naturgy Energy Group SA (NTGY SM)'s credit outlook from negative to stable considering that the company may not finally carry out the Gemini spin-off project.
Naturgy's shares do not trade on fundamentals, rather on expectations that IFM tries to increase its stake (free float is just 15%). There's some potential overhang risk though.
IFM has not acquired any significant stake since April, but I would not short the shares as IFM could resume share purchases on an opportunistic basis.


Event-Driven

<ul>
<li>The $19bn EV operation (vs. Repsol's market cap of €19bn) allows Repsol to maintain the majority in a strategic area, crystallizes value (market assigns a higher valuation to the E&amp;P division separately).</li>
<li>The implied valuation by the market is on average $3 billion lower. As usual with a minority stake sale, the market rarely values it at 100%. </li>
<li>I estimate a moderate positive impact (the deal is similar to what was announced in July), value unlocking could theoretically reach €2.5-€3 per share, but I'd take a neutral stance.</li>
</ul>


The $19bn EV operation (vs. Repsol's market cap of €19bn) allows Repsol to maintain the majority in a strategic area, crystallizes value (market assigns a higher valuation to the E&amp;P division separately).
The implied valuation by the market is on average $3 billion lower. As usual with a minority stake sale, the market rarely values it at 100%. 
I estimate a moderate positive impact (the deal is similar to what was announced in July), value unlocking could theoretically reach €2.5-€3 per share, but I'd take a neutral stance.


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

<ul>
<li>Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.</li>
<li>Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).</li>
<li>The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.</li>
</ul>


Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.
Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).
The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.


Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

<ul>
<li>Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.</li>
<li>Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.</li>
<li>Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.</li>
</ul>


Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.
Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.
Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.


Opportunities Within Energy and Materials

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Rex International Holding / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> reported FY21 results in late February which showed a dramatic improvement over FY20 due to rising oil prices and increased production</li>
<li>Accounting wise the picture was muddied by auditor fantasy valuation exercises which understated FY21 results. FY22 to be a "clean" year where positive cash flow impact becomes clearer to market.</li>
<li>Since 08/03/22 Rex trades on the SGX mainboard and remains the best pure-play oil bet in the Singapore market. Current oil prices indicate an FY22 cash flow bonanza.</li>
</ul>



Rex International Holding (REXI SP) reported FY21 results in late February which showed a dramatic improvement over FY20 due to rising oil prices and increased production
Accounting wise the picture was muddied by auditor fantasy valuation exercises which understated FY21 results. FY22 to be a "clean" year where positive cash flow impact becomes clearer to market.
Since 08/03/22 Rex trades on the SGX mainboard and remains the best pure-play oil bet in the Singapore market. Current oil prices indicate an FY22 cash flow bonanza.


Rex: Bargain Purchase and Auditor Fantasy Valuations

Spain

Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG).  The Company retails gasoline and other products through its chain of gasoline filling stations.  Repsol's petroleum reserves are in Spain, Latin America, Asia, North Africa, and the Middle East and United States.

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Repsol SA (REP SM)

Gemini Postponed Sine Die

Standard & Poor's has raised Naturgy's credit outlook from negative to stable given the possibility that the company will not finally carry out the...

Jesus Rodriguez Aguilar

Repsol: Sale of 25% of E&P Division

The $19bn EV operation (vs. Repsol's market cap of €19bn) allows Repsol to maintain the majority in a strategic area, crystallizes value (market...

Jesus Rodriguez Aguilar

Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong,...

Vermilion Research

Opportunities Within Energy and Materials

Global indexes remain below our key lines in the sand of $54 on $ACWX, $75.25 on $EFA, and the 200-day MA on $ACWI. As long as prices are below...

Vermilion Research

Rex: Bargain Purchase and Auditor Fantasy Valuations

Rex reported stellar FY21 results. Accounting fantasy valuations suppressed the true cash flow impact but this noise should disappear in FY22....

Nicolas Van Broekhoven

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