Report
Dave Nicoski ...
  • Ross LaDuke
EUR 234.63 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Global equities nearing potential resistance

Helped by support from global central banks and improving trade headlines, critical support levels have held for major global indexes and therefore our outlook remains constructive. At the same time, just because these indexes are not breaking down does not mean they are headed higher. Rather, we believe global equities remain in a state of purgatory and consolidation is likely to continue as several major indexes approach logical resistance... see charts below and page 2. With global equity markets generally moving sideways, we want to stick with themes that are working -- we highlight some of these themes below.

• Actionable Theme: Australian Banks. Australia's ASX All Ordinaries index is breaking out to new highs and RS is inflecting topside a 10-year downtrend. Particularly timely setups are unfolding in the Australian Banks, which have developed price and RS bottoms over the last several weeks... see page 3.

• Actionable Theme: Health Care. Global Health Care stocks (ACWI Health Care) are staging bullish price and RS reversals and in Europe, the STOXX 600 Health Care supersector is breaking out to all-time highs -- add exposure... see page 4.

• Actionable Theme: Manufacturing/Industrials. While global Industrials are improving as a whole, a focus in today's report is on Japanese Manufacturing stocks (Hitachi, Mitsubishi Heavy Industries, etc.) which display actionable price and RS bottoms -- add exposure. European Industrials also remain attractive and RS signals leadership -- overweight/add exposure... see pages 5-6.

• European/UK Banks and Autos & Parts. Despite much deeper pullbacks than we would like to see, the STOXX Europe 600 Banks and Autos & Parts supersectors still appear to be bottoming. We view bottoms in these beaten-down cyclical areas of the market as an encouraging sign for prospects of both European and global equities.
Underlyings
77 Bank Ltd.

77 Bank is a regional bank with total assets of Y8,649,396 million and operates 136 branches, as well as 5 sub-branches mainly in Miyagi Prefecture as of Mar. 31 2017. Co.'s banking business provides saving and transactional accounts, consumer and business loans, mortgage loans, certificates of deposit, corporate banking, investment banking, banker's acceptance, investment products including mutual funds and retirement accounts, insurance products, internet and mobile banking, fiduciary services, and domestic and foreign exchange. Co. is also engaged in the equipment and vehicle leasing, credit card issuance, guaranty services, investment fund management and other financial services.

Aier Eye Hospital Group Co. Ltd. Class A

Aier Eye Hospital Group Co.,Ltd. is a China-based ophthalmic medical institution. The Company is mainly engaged in ophthalmic diseases treatment, surgical services and medical optometry. The Company mainly provides corneal refractive surgery, cataract operation, anterior segment operation, posterior segment operation and optometry services. The Company mainly operates its business in domestic market, with Central China as its main market.

Alstom SA

Alstom serves the power generation and transmission markets, and rail transport market. Co.'s activities are divided into four sectors: the Thermal Power Sector (Co. offers power generation solutions using gas or coal to services including plant modernization, maintenance and operational support); the Renewable Power sector offers EPC solutions, turbines and generators, control equipment and maintenance for Hydropower and Wind power activities; the Grid Sector designs and manufactures equipment and turnkey solutions to manage power grids and transmit electricity from the power plant to the large end-user; and the Transport Sector provides rail transport products, systems and services.

Amano Corporation

Amano and its affiliates are mainly engaged in the manufacture and sale of time information system and environment system. Co.'s principal products are information systems including time & attendance, payroll, human-resource management, access control, and cafeteria systems; time management equipment including time recorders and time stamps; parking systems including vehicle- and bicycle-parking space management systems; environmental systems including standard dust collectors, large dust collection systems, pneumatic powder conveyance systems, and electrolytic water generators; and clean systems including cleaning equipment and dry-care cleaning systems.

Amplifon S.p.A.

Amplifon is multinational company engaged in the ddistribution, fitting, adaptation and personalization of hearing systems (hearing aids) designed to meet the needs of those suffering from hearing disabilities. Co. is also engaged in the sale of accessories such as batteries, consumables and spare parts, as well as in the distribution of biomedical devices. Co. is active in 20 different countries: Italy, France, Germany, Switzerland, The Netherlands, Belgium, Luxembourg, the U.K., Ireland, Spain, Portugal, Hungary, Turkey, the U.S., Canada, Australia, New Zealand, India, Egypt, and in Poland.

Bendigo & Adelaide Bank Ltd.

Bendigo & Adelaide Bank provides a range of banking and other financial services including consumer, residential, business and commercial lending, deposit-taking, payments services, wealth management, funds management and superannuation, treasury and foreign exchange services. Co. provides these services primarily to retail customers and small to medium sized businesses throughout Australia. The key lending activities are commercial finance, business lending and consumer finance which includes residential loans, personal loans, credit cards and overdrafts. As of June 30 2016, Co. had total assets of A$68.58 billion and total deposits of A$57.05 billion.

Credit Corp Group

Credit Corp Group is engaged in debt purchase and collection as well as consumer lending. Co.'s segments are comprised of: debt ledger purchasing, which is comprised of purchases of consumer debts at a discount to their face value from credit providers with the objective of recovering amounts in excess of the purchase price over the collection life cycle of the receivables; and Consumer lending, which provides various financial products to credit-impaired consumers.

CSL Limited

CSL is engaged in the research, development, manufacture, marketing and distribution of biopharmaceutical and allied products. Co.'s operations are divided into three segments: CSL Behring, Seqirus, and CSL Intellectual Property. CSL Behring is engaged in manufacturing, marketing and developing plasma therapies (plasma products and recombinants). Seqirus is engaged in manufacturing and distributing non-plasma biotherapeutic products. CSL Intellectual Property is engaged in the licensing of intellectual property of Co. to unrelated third parties. Co. operates primarily in five specific geographic areas, namely Australia, the U.S., Germany, Switzerland, and the U.K.

DMG MORI CO. LTD.

DMG MORI and its affiliates are mainly engaged in the manufacture and sale of machine tools and the provision of technical assistance. Co.'s primary products include CNC lathes, vertical-type and horizontal-type machining centers, multi-axis machines and grinding machines. In addition, Co., through its subsidiaries, is involved in the development of software for machine tools; the overhaul of used machine tools; the design, manufacture and sale of machine tools related equipment; and the manufacture and sale of grinding machine, automotive parts, mold parts and machine tools parts.

Duskin Co. Ltd.

Duskin and its affiliates are mainly engaged in the rental of dust control products and the sale of food products. Co. is engaged in the leasing of cleaning materials and equipment, cabinet towels, industrial waste cloth, water purifiers and air purification systems; the sale of daily products, cosmetics and toiletries; the provision of house cleaning, housework, pest control and facility management services; the leasing and sale of uniforms as well as travel, baby and leisure products; and the operation of doughnuts shops and restaurants. Co. is also engaged in the leasing of office equipment and commercial vehicles and the provision of hospital management and insurance agency services.

Ebos Group

EBOS Group is a provider of medical and healthcare products to the human and animal markets. Co. operates in two business segments, being Healthcare, which incorporates the sale of healthcare products in a range of sectors, own brands, retail healthcare, wholesale activities, and logistics; as well as Animal Care, which incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities. Co.'s operations are primarily in New Zealand and Australia.

EM Systems Co. Ltd.

Em Systems is engaged in the development and sale of medical business system and management of dispensing pharmacy businesses. Dispensing system segment is engaged in the development, sale and maintenance of dispensing systems for pharmacy. Medical system segment provides medical administration processing computer system and electronic medical record system to medical institutes such as hospitals and clinics. Other businesses is engaged in the provision of systems for nursing care service provider, the operation of a sports gym under the name "PCP x LASANTE," and a nursery school under the name "LaLa Kids"; as well as the operating of rental meeting room and pharmacy.

Extendicare Inc.

Extendicare Real Estate Investment is an unincorporated, open-ended real estate investment trust. Co., through its wholly owned subsidiaries is a provider of long-term care and related services in North America. Co., through its subsidiary, Extendicare Health Services, Inc operated and offered a continuum of health care services, including nursing care, assisted living and related medical services, such as subacute care and rehabilitative therapy in the United States. Co., through its subsidiaries, Extendicare (Canada) Inc. and through ParaMed Home Health Care, is a provider of home health care in Ontario and Alberta.

Galapagos NV

Galapagos is a clinical-stage biotechnology company specialized in the discovery and development of small molecule medicines with novel modes of action, addressing disease areas of high unmet medical need. Execution on its proprietary drug target discovery platform has delivered a pipeline that consists of three Phase 2, three Phase 1, five pre-clinical, and 20 discovery programs in inflammation, cystic fibrosis, or CF, osteoarthritis, and other indications. Co.'s highly flexible platform offers applicability across a broad set of therapeutic areas. Co.'s programs include filgotinib, GLPG1837, GLPG1690, GLPG2222, GLPG1972.

Genmab A/S

Genmab is a biotechnology company specializing in the creation and development of differentiated human antibody therapeutics focused on the treatment of cancer. Co.'s product pipeline includes one marketed product, Arzerra, daratumumab in late stage clinical development, four antibodies in clinical development, and over 20 in-house and partnered pre-clinical programs. Co.'s Arzerra (ofatumumab) is a human monoclonal antibody which targets an epitope on the CD20 molecule. Co.'s proprietary technologies include the DuoBody technology, which creates antibodies that can target two molecules at once, and the HexaBody technology, which allows for the creation of more potent antibodies.

Genomma Lab Internacional S.A.B. de C.V.

Genomma Lab Internacional engages in the development, sales and marketing of a range of premium products within 73 own brands, offering products in various categories, including anti-acne, generic drugs, sexual protection and enhancement, creams to improve appearance of scars, hemorrhoid treatments, varicose vein treatments, and hair loss treatments, topical analgesics, antacids, topical antifungals, colitis treatments, stress management, osteoarthritis treatments, soaps, multivitamins, shampoos and flu treatments.

Hitachi Ltd.

Hitachi and its subsidiaries are engaged in the development, manufacture and sale of diversified product mix ranging from electricity generation systems to consumer products and electronic devices. Co.'s businesses are diverse, and include information and telecommunication systems, social infrastructure and industrial systems, electronic systems and equipment, construction machinery, high functional materials and components, automotive systems, life & eco systems, financial services, and others including logistics services, optical disk drive, as well as real estate business.

Kone Oyj Class B

KONE is an elevator and escalator industry group based in Finland. Co. is engaged in the provision of products and services for the installation, modernization and maintenance of elevators, escalators and automatic building doors. Co. provides its products and services throughout the entire lifecycle of the equipment, beginning from the installation of new equipment to the maintenance and modernization during their lifecycle and the full replacement of the equipment. Co.'s customers are active in industry segments such as residential, office, retail, public transportation, hotel, hospital, and marine.

Korian SA

Korian is an actor on the temporary and permanent dependency care market in France, Germany and Italy. Co. offers and develops services related to dependency through its retirement homes (116 as of Dec 31 2009), follow-up care and rehabilitation facilities (35 as of Dec 31 2009) and psychiatric clinics (11 as of Dec 31 2009). Co.'s operations can be divided into four geographical segments: Medical and Social activity in France (retirement homes); Sanitary activity in France (follow-up care, rehabilitation, psychiatry and home medical care); Italy; and Germany.

Menicon

Menicon is a contact lens manufacturer which engaged in the manufacture and sale of contact lenses and related products. Co. manufactures and sells rigid gas permeable contact lenses, soft contact lenses, and disposal contact lenses of 1 day disposal type, 2 weeks exchange type, and 1 month exchange type, as well as contact lens care products such as contact lens cleaner, disinfectant solution and preservation solution. Co. offers a fixed-rate membership system "MELS Plan" to provide guarantee services for loss, damage, and lens power change. In addition, Co. is also engaged in the veterinary business, environmental biotechnology business, and life science business.

Mitsubishi Heavy Industries Ltd.

Mitsubishi Heavy Industries is a manufacturer of heavy machinery. Along with its affiliates, Co. is engaged in the design, manufacture, installation, sale and after-sales services of boilers, turbines, diesel engines, power generation facilities, passenger ships, liquefied natural gas ("LNG") ships, liquefied petroleum gas ("LPG") ships, container ships, oil tankers, offshore structure, civil aircraft and aero engine, defense equipment, space equipment, waste treatment systems, traffic systems, cranes, forklifts, construction and agricultural machinery, and others. Co. is also engaged in the sale, purchase and leasing of properties and the printing business.

National Australia Bank Limited

National Australia Bank provides banking services, credit and access card facilities, leasing, housing and general finance, international banking, investment banking, wealth management, funds management, life insurance and custodian, trustee and nominee services. Co.'s division include: Australian Banking, which provides products and services to retail and business customers; National Australia Bank Limited Wealth, which provides superannuation, investment and insurance solutions; and New Zealand Banking, which comprises the Retail, Business, Agribusiness, Corporate and Institutional and Insurance franchises in New Zealand. As of Sept 30 2016, Co. had total assets of A$777.62 billion.

NFI Group Inc.

NFI Group is engaged in the manufacturing of heavy-duty transit buses and the provision of aftermarket parts and supports in the United States and Canada. Co. has two operating segments: Bus Manufacturing Operations and Aftermarket Operations. The Bus Manufacturing Operations segment designs, manufactures and sells heavy-duty transit buses of various body lengths with diverse propulsion systems. The Aftermarket Operations segment supports all post-sale activities, including parts distribution, field services, support documentation and training.

Nissin Electric Co. Ltd.

Nissin Electric is a manufacturer of power system equipment and charged particle beam-oriented equipment. Co. operates in four business segments: Electric Equipment, Beam and Vacuum Application, New Energy and Environment, and Life Cycle Engineering. Co. manufactures power system equipment necessary to ensure reliable power supplies. Charged particle beam-oriented equipment includes high technology products such as ion implanters, electron processing systems, and thin-film coating equipment. Co. also provides a variety of engineering services ranging from installation and adjustment of high technology based products to advanced technical treatments.

Rheinmetall AG

Rheinmetall is a holding company. Through its subsidiaries, Co. operates in two sectors: defence and automotive. Co.'s defence sector is comprised of three divisions: combat systems, engaging in armored tracked vehicles and NBC protection systems; electronic solutions, engaging in air defence systems and soldier systems; and wheeled vehicles, engaging in wheeled logistics vehicles and wheeled tactical vehicles. Co.'s automotive sector is comprised of three division: mechatronics, engaging in cutting emissions and air management systems; hardparts, engaging in pistons and plain bearings and bushes; and motorservice, which includes aftermarket activities for replacement parts business.

Shibaura Machine Co. Ltd.

Shibaura Machine Co Ltd Formerly known as Toshiba Machine Co Ltd. Shibaura Machine Co Ltd is a Japan-based company mainly engaged in the provision of molding machines and machine tools. It operates through two business segments. Molding Machine segment is engaged in the manufacture, sale, installation, and maintenance of injection molding machines, extrusion molding machines and die casting machines. Products include all-electric injection molding machine EC-SXIII, EC-SX and EC-S series, hybrid type Injection molding machine ED and IS series, special specification injection molding machine, fine foam molding and control system. Machine Tool segment is engaged in the manufacture, sale, installation and maintenance of machine tools. Products include high-speed shape machines MPJ-M and MPJ series, horizontal boring machines BTD-100R12 and BTD-110H.R13/R16, grinding machines KWA-D and KT-C series. It is also engaged in manufacture and sale of industrial robots, servo motors, computer numerical control (CNC) devices, sewerage-related measuring equipment.

Ship Healthcare Holdings Inc.

Ship Healthcare Holdings is a holding company engaged in the provision of healthcare facility consulting and medical supply services. Total Pack Produce segment is engaged in the provision of consulting services for healthcare facility construction, expansion and renovation; the sale and leasing of medical equipment; the provision of facility planning, design and construction; and the provision of operational consulting and other related services. Medical Supplies segment is engaged in the sale of pharmaceutical products, medical supplies and medical equipment. Life Care segment operates senior care facilities and residential care homes. Dispensing Pharmacies segment operates pharmacies.

VBG Group AB Series B

VBG Group is an engineering Group, based in Sweden, with manufacturing and sales companies in Europe, India and the U.S.A. Co. is engaged in supplying equipment to customers in the truck and machine industries. Co.'s operations are divided into two business areas: VBG Group Truck Equipment and RingFeder Power Transmission. VBG Truck Equipment segment has products including coupling equipment and fifthwheels. RingFeder Power Transmission manufactures mechanical power transmissions and industrial dampings. Customers include truck manufacturers and the machine industry worldwide.

Vifor Pharma AG

Vifor Pharma is a holding company. Through its subsidiaries, Co. develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. Pharma markets pharmaceutical iron-based products and offers a broad range of OTC products, prescription products, herbal remedies and parapharmaceutical products. Logistics delivers supplies to pharmacies, physicians, drugstores and hospitals and also handles and coordinates the purchase, sale, warehousing and distribution of products for third parties. Healthcare Information provides ways of networking the healthcare market. Retail runs pharmacies and participates in Coop Vitality.

WEG S.A.

Weg is a holding company. Through its subsidiaries, Co. is engaged in the production and trade of capital goods such as electric motors, generators and transformers; gear units and geared motors; frequency converters; motor starters and maneuver devices (circuit breakers); control and protection of electric circuits and industrial automation; electric traction solutions (land and sea); solutions for the generation of renewable and distributed energy; no-breaks and alternators for groups of generators; electric substations; industrial electrical and electronic equipment systems; and industrial paint and varnish. Co. operates in three segments: industry, energy, and foreign.

Westpac Banking Corporation

Westpac Banking is a banking organization with branches, affiliates and controlled entities throughout Australia, New Zealand, Asia and in the Pacific region. Co. provides a range of banking and financial services in these markets, including consumer, business and institutional banking and wealth management services. Co. is engaged in the provision of financial services including lending, deposit taking, payments services, investment portfolio management and advice, superannuation and funds management, insurance services, leasing finance, general finance, interest rate risk management and foreign exchange services. As of Sep 30 2017, Co. had total assets of A$851,875,000,000.

Zeria Pharmaceutical Co. Ltd.

Zeria Pharmaceutical and its subsidiaries are mainly engaged in the manufacture, sale, import, and export of prescription drugs and health care products. Ethical Pharmaceuticals segment manufactures, purchases and sells ethical pharmaceuticals including "Acofide®" therapeutic agent for functional dyspepsia, "Asacol®" therapeutic agent for ulcerative colitis, "Promac®" zinc-containing anti-ulcer agent, and other. Consumer Healthcare segment manufactures, purchases and sells OTC drugs, as well as manufactures and sells cosmetics. Co. is also engaged in the insurance agency and real estate services, the purchase and sale of sales promotional materials, and the maintenance business.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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