Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

Thematic (Sector/Industry)

<p class="p1"><span class="s1">Last week the immediate shock from the Brexit eased considerably. It has become clear that all the Brexit vote really did was guarantee a prolonged period of uncertainty. It has also become clear that it will take months to gauge the impact that this prolonged period of uncertainty will have on both the Eurozone and global economy.</span></p>

Last week the immediate shock from the Brexit eased considerably. It has become clear that all the Brexit vote really did was guarantee a prolonged period of uncertainty. It has also become clear that it will take months to gauge the impact that this prolonged period of uncertainty will have on both the Eurozone and global economy.

What Investors Should Be Asking About A Brexit

Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

<p><strong>Transition from the Irish Stock Exchange to the London Stock Exchange</strong></p><p>Dragon Capital’s fund <a href="https://www.smartkarma.com/entities/22754" target="_blank" data-smartkarma-citation="entities:22754">Vietnam Enterprise Investments Limited</a>, which currently trades on the Irish Stock Exchange, may trade on the main market of the London Stock Exchange next month.  The company plans to hold an Extraordinary General Meeting on June the 21st to vote on the approval of this transfer, which is expected to potentially take place next month.  The fund currently manages over $850 million, and is most notable for…</p>

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund Vietnam Enterprise Investments Limited, which currently trades on the Irish Stock Exchange, may trade on the main market of the London Stock Exchange next month.  The company plans to hold an Extraordinary General Meeting on June the 21st to vote on the approval of this transfer, which is expected to potentially take place next month.  The fund currently manages over $850 million, and is most notable for…

Dragon Capital's VEIL Fund: A 3rd London Listing for Vietnam May Emerge Next Month

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<ul><li class="p1">Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.</li><li class="p1">The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.</li><li class="p2">In our opinion, the strongest antidote to these pressures is a strong brand.</li><li class="p2">In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.</li><li class="p2">We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.</li></ul><p class="p2">Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFA</p><p class="p2">Full report below the fold...&nbsp;</p>

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.In our opinion, the strongest antidote to these pressures is a strong brand.In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFAFull report below the fold...&nbsp;

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<p>At the awaited auction for <a href="https://www.smartkarma.com/entities/wm-morrison-supermarkets-plc" target="_blank" data-smartkarma-citation="entities:22052:1" rel="noopener">Wm Morrison Supermarkets (MRW LN)</a>, CD&amp;R increased its bid to <strong>287p</strong> against a bid of 286p made by Fortress. CD&amp;R took its prey. Fortress, which had preemptively struck (<a href="https://www.smartkarma.com/insights/fortress-morrisons-272p-pre-emptive-strike" target="_blank" data-smartkarma-citation="insights:55791" rel="noopener">Fortress/Morrisons: 272p Pre-Emptive Strike</a>) saved face and CD&amp;R won by increasing its stretched offer by just 0.7% (c. £48 mn). Fortress could have withdrawn just as Carlyle did in the tussle with Philip Morris for <a href="https://www.smartkarma.com/entities/vectura-group-plc" target="_blank" data-smartkarma-citation="entities:22201:1" rel="noopener">Vectura (VEC LN)</a>, but preferred to make its rival pay a bit extra.</p>
<p>The consideration represents an <strong>implied equity value</strong> of <strong>£7,032 mn</strong> and an implied EV of £10,113 mn. This also represents <strong>9.1x EV/Fwd EBITDA</strong> and <strong>20.4 Fwd P/E</strong>.</p>
<p>The 61% premium vs. closing price prior to commencement of the offer period highlights the extreme lengths PE firms are willing to go to spend its dry powder, amid a global deal frenzy.</p>
<p>The only approvals required by CD&amp;R are the approval by the requisite majority of scheme shareholders at the Court Meeting and Morrisons shareholders at the General Meeting and sanction of the Scheme by the Court.</p>
<div data-bind="visible: expandedContent()">
<div data-part="sectionContent">
<div data-bind="widget: {kind: 'web/grid/portlet',columns: $root.estimateEventRatioGridColumns,dataSource: $root.estimateEventRatioGridData(),gridWidth: '100%',enableColumnHeaders: true,enableAlternateRowStyles: true,exportSchema: $root.estimateEventRatioExportSchema,exportType: $root.exportType,exportPromise: $root.gridLoadedPromises[28],renderPromise: $root.gridRenderedPromises[28],gridDefinitions: $root.estimateEventRatioDefinitions}">
<div data-bind="style: { width: width }, lazyRender: true" data-view="widgets/web/grid/portlet/view" data-active-view="true">
<div id="snl-query-portlet-grid80" data-bind="attr: { 'id': id }" data-part="snlPortletGrid">
<div id="snl-query-portlet-grid80_i5_grid_table_container">
<p>According to my calculations, the winning bid should achieve an <strong>11.8% IRR by year 8</strong>. Assumptions are an exit multiple of 8.5x (this would be a substantial re-rating vs. the previously considered 7.9x), cutting capex by a fifth, an EBITDA margin improvement to 6.3% (a c. 20 bps gain vs. Capital IQ consensus forecasts, with the necessary caveat that such a move may drive customers out of the stores and therefore lead to a loss of market share). </p>
</div>
</div>
</div>
</div>
</div>
</div>
<p><strong>Gross spread</strong> is <strong>0.5%</strong>. The deal will complete. Time to surrender the shares.</p>

At the awaited auction for Wm Morrison Supermarkets (MRW LN), CD&amp;R increased its bid to 287p against a bid of 286p made by Fortress. CD&amp;R took its prey. Fortress, which had preemptively struck (Fortress/Morrisons: 272p Pre-Emptive Strike) saved face and CD&amp;R won by increasing its stretched offer by just 0.7% (c. £48 mn). Fortress could have withdrawn just as Carlyle did in the tussle with Philip Morris for Vectura (VEC LN), but preferred to make its rival pay a bit extra.
The consideration represents an implied equity value of £7,032 mn and an implied EV of £10,113 mn. This also represents 9.1x EV/Fwd EBITDA and 20.4 Fwd P/E.
The 61% premium vs. closing price prior to commencement of the offer period highlights the extreme lengths PE firms are willing to go to spend its dry powder, amid a global deal frenzy.
The only approvals required by CD&amp;R are the approval by the requisite majority of scheme shareholders at the Court Meeting and Morrisons shareholders at the General Meeting and sanction of the Scheme by the Court.






According to my calculations, the winning bid should achieve an 11.8% IRR by year 8. Assumptions are an exit multiple of 8.5x (this would be a substantial re-rating vs. the previously considered 7.9x), cutting capex by a fifth, an EBITDA margin improvement to 6.3% (a c. 20 bps gain vs. Capital IQ consensus forecasts, with the necessary caveat that such a move may drive customers out of the stores and therefore lead to a loss of market share). 






Gross spread is 0.5%. The deal will complete. Time to surrender the shares.

Index Rebalance

<p>In my last insight about <a href="https://www.smartkarma.com/entities/wm-morrison-supermarkets-plc" target="_blank" data-smartkarma-citation="entities:22052:1" rel="noopener">Wm Morrison Supermarkets (MRW LN)</a> (see <a href="https://www.smartkarma.com/insights/fortress-morrisons-272p-pre-emptive-strike" target="_blank" data-smartkarma-citation="insights:55791" rel="noopener">Fortress/Morrisons: 272p Pre-Emptive Strike</a> ), <strong>I mentioned that a bid from CD&amp;R could come at 285p</strong>. The bid came, recommended, at 285p and the shares closed at 291p on 20 August.</p>
<p>Now shares are trading at around 291p,  on expectations of a raised offer by Fortress and  expectations that Morrisons may enter the FTSE 100, which should support the shares and drive them higher, as per per fellow insight provider Brian Freitas (see <a href="https://www.smartkarma.com/insights/ftse100-index-rebalance-preview-takeover-names-in-focus" target="_blank" data-smartkarma-citation="insights:56622" rel="noopener">FTSE100 Index Rebalance Preview: Takeover Names in Focus</a>). Brian recommends buying the stock at 285p or slightly higher.</p>
<div>
<p>Unsurprisingly, private equity has first directed its raid towards Morrisons, because it can take higher debt than competitors:</p>
<ul>
<li>It has the highest ownership of its properties at 87% vs. c. 57% for <a href="https://www.smartkarma.com/entities/j-sainsbury-plc" target="_blank" data-smartkarma-citation="entities:22130:1" rel="noopener">J Sainsbury PLC (SBRY LN)</a>  and c. 58% for <a href="https://www.smartkarma.com/entities/tesco-plc" target="_blank" data-smartkarma-citation="entities:22187:1" rel="noopener">Tesco PLC (TSCO LN)</a>.</li>
<li>Its FY2023e gearing of 2.3x including operating leases, is the lowest in the industry and it has a £682 million pension surplus.</li>
<li>Its 2023e FCF will reach c. £447 mn (Capital IQ consensus).</li>
</ul>
<p>As already mentioned, the 285p counteroffer by CD&amp;R would achieve and IRR of 12%, and would rely on a high exit multiple of 8.5x (this would mean a substantial re-rating vs. the previously considered 7.9x), cutting in Capex by a fifth, an EBITDA margin improvement to 6.3% (a c. 20 bps gain vs. Capital IQ consensus forecasts, with the necessary caveat that such a move may drive customers out of the stores and therefore loss of market share). Obtaining a higher IRR would involve substantial sale&amp;leaseback.</p>
</div>
<p><strong>None of the bidding parties has declared its offer as final and another bid could come from Fortress</strong>. If that happened, I believe the Panel would set up an orderly auction process. I change my recommendation to <strong>long MRW LN</strong>. Downside is limited to 2.1%.</p>
<p>The focus will turn now to <a href="https://www.smartkarma.com/entities/j-sainsbury-plc" target="_blank" data-smartkarma-citation="entities:22130:1" rel="noopener">J Sainsbury PLC (SBRY LN)</a>.</p>

In my last insight about Wm Morrison Supermarkets (MRW LN) (see Fortress/Morrisons: 272p Pre-Emptive Strike ), I mentioned that a bid from CD&amp;R could come at 285p. The bid came, recommended, at 285p and the shares closed at 291p on 20 August.
Now shares are trading at around 291p,  on expectations of a raised offer by Fortress and  expectations that Morrisons may enter the FTSE 100, which should support the shares and drive them higher, as per per fellow insight provider Brian Freitas (see FTSE100 Index Rebalance Preview: Takeover Names in Focus). Brian recommends buying the stock at 285p or slightly higher.

Unsurprisingly, private equity has first directed its raid towards Morrisons, because it can take higher debt than competitors:

It has the highest ownership of its properties at 87% vs. c. 57% for J Sainsbury PLC (SBRY LN)  and c. 58% for Tesco PLC (TSCO LN).
Its FY2023e gearing of 2.3x including operating leases, is the lowest in the industry and it has a £682 million pension surplus.
Its 2023e FCF will reach c. £447 mn (Capital IQ consensus).

As already mentioned, the 285p counteroffer by CD&amp;R would achieve and IRR of 12%, and would rely on a high exit multiple of 8.5x (this would mean a substantial re-rating vs. the previously considered 7.9x), cutting in Capex by a fifth, an EBITDA margin improvement to 6.3% (a c. 20 bps gain vs. Capital IQ consensus forecasts, with the necessary caveat that such a move may drive customers out of the stores and therefore loss of market share). Obtaining a higher IRR would involve substantial sale&amp;leaseback.

None of the bidding parties has declared its offer as final and another bid could come from Fortress. If that happened, I believe the Panel would set up an orderly auction process. I change my recommendation to long MRW LN. Downside is limited to 2.1%.
The focus will turn now to J Sainsbury PLC (SBRY LN).

CD&R Leading the Bid War for Morrisons with a Recommended Offer

United Kingdom

Morrisons is the fifth largest supermarket chain in the United Kingdom, retailing groceries, clothing, and general merchandise products. The company also operates as a food maker with 19 manufacturing facilities. It was founded in 1899 by William Morrison and is headquartered in Bradford, England.

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

Morrisons (MRW LN)

What Investors Should Be Asking About A Brexit

Last week the immediate shock from the Brexit eased considerably. It has become clear that all the Brexit vote really did was guarantee a prolonged...

David Riedel

Dragon Capital's VEIL Fund: A 3rd London Listing for Vietnam May Emerge Next Month

Transition from the Irish Stock Exchange to the London Stock ExchangeDragon Capital’s fund Vietnam Enterprise Investments Limited, which currently...

Nomadic Equity

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack...

Morningstar, Inc.

CD&R/Morrisons: Final Offer and Spread

The winning bid should achieve an 11.8% IRR by year 8 (leverage of 4.1x net debt/EBITDA). Gross spread is 0.5%. The deal will complete. Time to...

Jesus Rodriguez Aguilar

CD&R Leading the Bid War for Morrisons with a Recommended Offer

None of the bidders has declared its offer final. Another bid could come from Fortress and the Panel would set up an orderly auction. Further...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)