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

iShares MSCI EAFE ETF / Technical Analysis

<ul>
<li>We continue to believe that a bearish intermediate-term outlook is appropriate as long as the YTD downtrends remain intact on MSCI ACWI (ACWI-US), MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).</li>
<li>We would turn bullish only on reversals of those downtrends. With that said, a bear market rally has officially begun, something that we have discussed since our Sept.29 Int'l Compass</li>
<li>We expect to see rallies to their respective YTD downtrends (ACWX, EFA, etc.). We highlight buys that are likely to outperform on this bear market rally.</li>
</ul>


We continue to believe that a bearish intermediate-term outlook is appropriate as long as the YTD downtrends remain intact on MSCI ACWI (ACWI-US), MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
We would turn bullish only on reversals of those downtrends. With that said, a bear market rally has officially begun, something that we have discussed since our Sept.29 Int'l Compass
We expect to see rallies to their respective YTD downtrends (ACWX, EFA, etc.). We highlight buys that are likely to outperform on this bear market rally.


Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 24 September, Tetra Tech outbid WSP with a recommended 222p/share cash offer, a 7.8% increase vs. WSP's and 110% premium to the start of the offer period.</li>
<li>The new offer represents 19.1x EV/Fwd EBIT and 25.7x Fwd P/E, and seems dilutive for Tetra Tech. Irrevocables and letters of intent amount to 27.53%.</li>
<li>Expect the shares to quickly close the spread at the beginning of the 26 September trading session and the market to possibly await a counterbid.</li>
</ul>


On 24 September, Tetra Tech outbid WSP with a recommended 222p/share cash offer, a 7.8% increase vs. WSP's and 110% premium to the start of the offer period.
The new offer represents 19.1x EV/Fwd EBIT and 25.7x Fwd P/E, and seems dilutive for Tetra Tech. Irrevocables and letters of intent amount to 27.53%.
Expect the shares to quickly close the spread at the beginning of the 26 September trading session and the market to possibly await a counterbid.


<ul>
<li>WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.</li>
<li>The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.</li>
<li>The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.</li>
</ul>


WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.
The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.
The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.


WSP Global/RPS Group: More Consolidation In Engineering Consultancy

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.

Equity Capital Markets

Hyundai Engineering   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a> has launched its IPO to raise US$0.8-1.0 billion at the price range of KRW57,900-75,700 per share.</li>
<li>In <a href="https://www.smartkarma.com/insights/hyundai-engineering-ipo-initiation-building-on-good-foundations" target="_blank" data-smartkarma-citation="insights:63360" rel="noopener">Hyundai Engineering IPO Initiation: Building on Good Foundations</a>, we stated that HEC has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. </li>
<li>In this note, we look at the syndicate's valuation methodology and present our valuation methodology. Our valuation analysis suggests that the IPO price range is unattractive. </li>
</ul>



Hyundai Engineering Co Ltd (HEC KS) has launched its IPO to raise US$0.8-1.0 billion at the price range of KRW57,900-75,700 per share.
In Hyundai Engineering IPO Initiation: Building on Good Foundations, we stated that HEC has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. 
In this note, we look at the syndicate's valuation methodology and present our valuation methodology. Our valuation analysis suggests that the IPO price range is unattractive. 


Hyundai Engineering IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hyundai-engineering-co-ltd" target="_blank" data-smartkarma-citation="entities:33008:1" rel="noopener">Hyundai Engineering Co Ltd (HEC KS)</a>/HEC is a leading global EPC (Engineering, Procurement and Construction) contractor. It is seeking to raise up to $1 billion.  </li>
<li>HEC is offering 16.0 million shares with a primary/secondary split of 25/75 at an indicative price range of KRW57,900-66,800 per share.</li>
<li>HEG has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. </li>
</ul>



Hyundai Engineering Co Ltd (HEC KS)/HEC is a leading global EPC (Engineering, Procurement and Construction) contractor. It is seeking to raise up to $1 billion.  
HEC is offering 16.0 million shares with a primary/secondary split of 25/75 at an indicative price range of KRW57,900-66,800 per share.
HEG has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. 


Hyundai Engineering IPO Initiation: Building on Good Foundations

Canada

WSP Global Inc. offers engineering services.  The Company offers professional services in the areas of construction, energy, the environment, mining, municipal infrastructure, project management, telecommunications, and transportation.

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WSP Global Inc (WSP CN)

Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

Bear Market Rally in Progress as $DXY, Global Sovereign 10-Year Yields Decline. Italy FTSE MIB with a bullish YTD downtrend reversal, Switzerland...

Vermilion Research

Tetra Tech Outbids WSP

Tetra Tech trumps WSP's offer for RPS. Consolidation is ongoing within civil engineering. Both companies aim to capture market share in ESG...

Jesus Rodriguez Aguilar

WSP Global/RPS Group: More Consolidation In Engineering Consultancy

In another consolidation move in engineering consultancy services, WSP agreed to acquire RPS Group in a well-timed transaction at a 76% premium,...

Jesus Rodriguez Aguilar

Hyundai Engineering IPO: Valuation Insights

HEC has launched its IPO to raise US$0.8-1.0 bn. Our valuation analysis suggests that HEC is fairly valued at the low end of the IPO price range....

Arun George

Hyundai Engineering IPO Initiation: Building on Good Foundations

HEC is seeking to raise up to $1 billion. HEG has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue...

Arun George

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