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

<ul>
<li>It appears the recent pullback is over, and we could see the MSCI ACWI (ACWI-US) test YTD highs at $93. We still expect $93 to cap upside in 2023.</li>
<li>Overweight Europe/UK and non-U.S., we are buyers on pullbacks as long as FTSE 100 is above 7700, STOXX Europe 50 is above 3800, and EURO STOXX 50 is above 4000.</li>
<li>As long as these support levels are holding, we are constructive from a price perspective</li>
</ul>


It appears the recent pullback is over, and we could see the MSCI ACWI (ACWI-US) test YTD highs at $93. We still expect $93 to cap upside in 2023.
Overweight Europe/UK and non-U.S., we are buyers on pullbacks as long as FTSE 100 is above 7700, STOXX Europe 50 is above 3800, and EURO STOXX 50 is above 4000.
As long as these support levels are holding, we are constructive from a price perspective


Remain Overweight Europe/UK & Non-US Equities; Pullback Over?; Buys in Industrials and Financials

<ul>
<li>Major breakouts for UK's FTSE 100, STOXX Europe 50, and Germany's DAX (among others) continue to support our belief that non-U.S. equities are likely to outperform in the months/years ahead.</li>
<li>We continue to recommend adding exposure to China/Hong Kong, and to add exposure/remain overweight Europe and the UK; these remain our favorite areas to invest in the year ahead.</li>
<li>The UK/Europe and Hong Kong/China make up the majority of today's individual stock buy recommendations. Industrials, Materials, and Consumer Discretionary Sectors are all bullish and highlighted today -- add exposure.</li>
</ul>


Major breakouts for UK's FTSE 100, STOXX Europe 50, and Germany's DAX (among others) continue to support our belief that non-U.S. equities are likely to outperform in the months/years ahead.
We continue to recommend adding exposure to China/Hong Kong, and to add exposure/remain overweight Europe and the UK; these remain our favorite areas to invest in the year ahead.
The UK/Europe and Hong Kong/China make up the majority of today's individual stock buy recommendations. Industrials, Materials, and Consumer Discretionary Sectors are all bullish and highlighted today -- add exposure.


UK's FTSE 100, STOXX Europe 50 Breaking Out; Non-U.S. Outperformance to Continue, Buys in Cyclicals

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Schneider increased its cash offer by 4% to <strong>3,225p/share</strong>, 47% premium, implied equity value of c.£9,863m and EV of £10,569m, <strong>27.8x EV/Fwd EBIT</strong>. Schneider said the sweetened bid is final.</li>
<li>The deal seems dilutive for Schneider: it would mean an implied Fwd P/E of 31.4x vs. 18.7x for Schneider and should increase Schneider's debt leverage to 1.9x.</li>
<li>The increased offer had been anticipated as the spread had been positive since the offer announcement. Gross spread has now turned negative and is -1.91% (including dividend) as of 14 November. Long.</li>
</ul>


Schneider increased its cash offer by 4% to 3,225p/share, 47% premium, implied equity value of c.£9,863m and EV of £10,569m, 27.8x EV/Fwd EBIT. Schneider said the sweetened bid is final.
The deal seems dilutive for Schneider: it would mean an implied Fwd P/E of 31.4x vs. 18.7x for Schneider and should increase Schneider's debt leverage to 1.9x.
The increased offer had been anticipated as the spread had been positive since the offer announcement. Gross spread has now turned negative and is -1.91% (including dividend) as of 14 November. Long.


<ul>
<li>Davidson Kempner and others may seek an improved offer of up to 3,500p/share, 29.7x EV/Fwd EBIT, in line with Ideagen's acquisition multiples. Gross spread is +2.38%.</li>
<li>Assuming AVEVA can reach 2018a 34.7% EBITDA margins and increase revenues, the offer price would seem cheap. An increase to 3,300p seems feasible, £4,073 million, similar to the Bridge Facility.</li>
<li>Current net debt/EBITDA is 1.3x and EBIT/interest is 33.6x, so it could comfortably take on that additional debt. At 3,300p, proforma net debt/EBITDA would be 1.9x, before adding any synergies.</li>
</ul>


Davidson Kempner and others may seek an improved offer of up to 3,500p/share, 29.7x EV/Fwd EBIT, in line with Ideagen's acquisition multiples. Gross spread is +2.38%.
Assuming AVEVA can reach 2018a 34.7% EBITDA margins and increase revenues, the offer price would seem cheap. An increase to 3,300p seems feasible, £4,073 million, similar to the Bridge Facility.
Current net debt/EBITDA is 1.3x and EBIT/interest is 33.6x, so it could comfortably take on that additional debt. At 3,300p, proforma net debt/EBITDA would be 1.9x, before adding any synergies.


Schneider Electric/​Aveva: Potential Offer Price Sweetening

<ul>
<li>Schneider has agreed a 3,100p (+13p interim) cash offer for the remaining 40.86% of AVEVA (41% premium, 26.7x EV/Fwd EBIT, 30.5x Fwd P/E), which some dub opportunistic.</li>
<li>The offer price is in line with average multiples for the last 5Y, and there's execution risk in the model transition of AVEVA, but riches may lie ahead. </li>
<li>Gross spread is +0.8% (+interim), the market expects a sweetening (no large shareholder has irrevocably undertaken to tender); the daily average GBP volume since 23 August has been c.£62 million.</li>
</ul>


Schneider has agreed a 3,100p (+13p interim) cash offer for the remaining 40.86% of AVEVA (41% premium, 26.7x EV/Fwd EBIT, 30.5x Fwd P/E), which some dub opportunistic.
The offer price is in line with average multiples for the last 5Y, and there's execution risk in the model transition of AVEVA, but riches may lie ahead. 
Gross spread is +0.8% (+interim), the market expects a sweetening (no large shareholder has irrevocably undertaken to tender); the daily average GBP volume since 23 August has been c.£62 million.


Schneider Electric/Aveva: Recommended Minorities Buyout

France

Schneider Electric SE manufactures power distribution and automation systems. The Company produces circuit breakers, remote installation management equipment, panelboards, programmable logic controllers, industrial control products, detectors, human-machine interfaces, and process controls.  Schneider's products are sold various brands.

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Schneider Electric Se (SU FP)

Remain Overweight Europe/UK & Non-US Equities; Pullback Over?; Buys in Industrials and Financials

Remain overweight Europe/UK and non-US equities; we are buyers on pullbacks as long as the FTSE 100 is above 7700, the STOXX Europe 50 is above...

Vermilion Research

UK's FTSE 100, STOXX Europe 50 Breaking Out; Non-U.S. Outperformance to Continue, Buys in Cyclicals

Recent major breakouts for the FTSE 100, STOXX Europe 50, and Germany's DAX (among others) continue to support our belief that non-U.S. equities...

Vermilion Research

Schneider Electric Sweetens AVEVA Bid

Schneider increased its cash offer by 4% to a final 3,225p/share, which represents an implied equity value of c. £9,863 million and an EV of...

Jesus Rodriguez Aguilar

Schneider Electric/Aveva: Potential Offer Price Sweetening

Hedge fund Davidson Kempner Capital Management is building a stake in Aveva (currently 3.5%) and will join others in pushing Schneider Electric...

Jesus Rodriguez Aguilar

Schneider Electric/Aveva: Recommended Minorities Buyout

The offer price does not come as a surprise and the operation, however dilutive, makes strategic sense for Schneider. Gross spread is positive and...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Remain Overweight Europe/UK & Non-US Equities; Pullback Over?; Buys in Industrials and Financials

Remain overweight Europe/UK and non-US equities; we are buyers on pullbacks as long as the FTSE 100 is above 7700, the STOXX Europe 50 is above...

Vermilion Research

UK's FTSE 100, STOXX Europe 50 Breaking Out; Non-U.S. Outperformance to Continue, Buys in Cyclicals

Recent major breakouts for the FTSE 100, STOXX Europe 50, and Germany's DAX (among others) continue to support our belief that non-U.S. equities...

Vermilion Research

Schneider Electric Sweetens AVEVA Bid

Schneider increased its cash offer by 4% to a final 3,225p/share, which represents an implied equity value of c. £9,863 million and an EV of...

Jesus Rodriguez Aguilar

Schneider Electric/​Aveva: Potential Offer Price Sweetening

Hedge fund Davidson Kempner Capital Management is building a stake in Aveva (currently 3.5%) and will join others in pushing Schneider Electric...

Jesus Rodriguez Aguilar

Schneider Electric/Aveva: Recommended Minorities Buyout

The offer price does not come as a surprise and the operation, however dilutive, makes strategic sense for Schneider. Gross spread is positive and...

Jesus Rodriguez Aguilar

Schneider Electric/Aveva: Potential Offer Price Sweetening