Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.15 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Add exposure to Technology, Communications

We view weakness over the past week as correcting a significant amount of the excess optimism that was baked-in to global equities. As a result, we recommend taking advantage of the pullback by adding exposure to our favorite areas - namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward.

• Index overviews: MSCI ACWI ex-US, MSCI EM, STOXX Europe 50, and the TOPIX indexes are analyzed from both a price and RS perspective... see page 2.

• Actionable Sectors: Financials, Technology, and Communications. Regarding Financials, we stand by all of last week's recommendations and would use recent weakness to add exposure. In today's report we highlight actionable stocks throughout the int'l Technology and Communications Sectors... see pages 3-4 for overviews and pages 5-13 for actionable stocks.

• EM: Remain overweight China; Taiwan improving. China indexes including the Shanghai Composite and Hang Seng China Enterprises are moving toward the lower end of the March trading range - add exposure. Three actionable stocks in today's report are Tencent (700-HK), China Mobile (941-HK), and Guangdong Ellington Electronics (603328-CN). Additionally, Taiwan is improving, boosted by strength in Technology stocks... see page 5.

• Utilities Sector RS is deteriorating -- reduce exposure. Our international Utilities Sector is exhibiting some RS deterioration. Such characteristics are consistent with bull markets and is supportive of our overall positive outlook... see table below, left.
Underlyings
Asahi Broadcasting

Asahi Broadcasting is a TV and radio broadcasting company. Co.'s network affiliates cover broadcasting services throughout Japan. Broadcasting segment is engaged in the planning, production, broadcasting and sale of TV and radio programs, as well as the editing and management of contents of broadcasting programs. Housing segment is engaged in the planning, operation and management of model home exhibition sites. Golf Club segment is involved in the operation of golf courses. Co. is also engaged in the leasing and management of real estate properties.

ASML Holding NV

ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.

BE Semiconductor Industries N.V.

BE Semiconductor Industries N.V. (Besi) is a holding company. The Company is engaged in the development, manufacturing, marketing, sales and service of semiconductor assembly equipment for the global semiconductor and electronics industries. It operates through three segments: Die Attach, Packaging and Plating. It develops assembly processes and equipment for leadframe, substrate and wafer level packaging applications in a range of end user markets, including electronics, computer, automotive, industrial and solar energy. The Company offers products, such as Die attach equipment, which include single chip, multi-chip, multi module, flip chip, thermo-compression bonding (TCB) and enhanced wafer level ball grid array (eWLB) die bonding systems, and die sorting systems; Packaging equipment, which include wafer level molding and singulation systems, and Plating equipment, which include metal plating systems and related process chemicals.

Central European Media Enterprises Ltd. Cl A

China Mobile Limited

China Mobile and its subsidiaries are engaged in the provision of mobile telecommunications and related services principally using the Global System for Mobile Communications standard and the Time Division Synchronous Code Division Multiple Access standard. In addition, Co. provides its customers with internet access through wireless local area networks. Co. also develops and carries its 4G business based on the TDD mode long-term evolution technology. As of Dec 31 2013, Co. had approx. 767,200,000 customers in all 31 provinces, autonomous regions and directly-administered municipalities in the People's Republic of China as well as in Hong Kong.

Compal Electronics Inc.

Compal Electronics is engaged in the design, research, development, manufacture and sale of computer, communication and consumer electronic products. Co.'s products include notebook computers, netbook computers, all-in-one computers, tablet computers, eReader, home cloud client infortainment player, automotive electronics, liquid-crystal display ("LCD") televisions, LCD monitor and projector. Through its subsidiaries, Co. is also engaged in the manufacture and sale of mobile devices; general investments; design, manufacture and sale of CD burner, backlight module and related parts; import and export trading; sale of wireless network products; notebook repair and after-sales services.

Delta Electronics Inc.

Delta Electronics is engaged in the installation of electronic control system; the manufacture of power supply unit for computer, computer information system, and electronic engine; and the manufacture, design and sale of communication products and components. Through its subsidiaries, Co. is engaged in the manufacture and sale of electronic control equipment, transformer, electronic devices and products, solar battery, integrated circuits, networking system and peripherals equipment; equity investment; and the provision of information software services.

Elecom

ELECOM and its subsidiaries are mainly engaged in the development, manufacture and sale of personal computer and digital equipment-related products. Along with its subsidiaries, Co. develops own brands products under the names of "ELECOM," "Logitec" and "HAGIWARA Solutions." Products offered include mouse, keyboards, network cameras, speakers, computer discs, computer bags, universal serial bus ("USB") hubs, game pads, hard disc cases, hard disc drives, digital versatile disc ("DVD") drives, liquid crystal display ("LCD") monitors, memory modules, USB flash memories, SD memory cards, wireless local area network ("LAN")-related products, in-vehicle recharges, media cases and mouse pads.

Elite Material

Elite Material is principally engaged in the manufacture, and sale of base materials for printed circuit board, printed circuit board, electronic chemical products, computer peripherals, and related electronic semiconductor. Co.'s main products include copper clad laminates, prepreg and mass lamination boards.

GETAC TECHNOLOGY

Getac Technology is engaged in the research, development, manufacture and sale of notebook computer, military computer, industrial computer, related telecommunication equipment, parts, software and hardware, battery module, LED driver, inverter and converter, mobile and battery charger; and the provision for repair and maintenance and technical consultancy services.

Giga-Byte Technology Co. Ltd.

Giga-Byte Technology is engaged in the activities of the manufacturing, processing and selling of computer hardware, components and other peripheral facilities, the provision of investment services, notebook manufacturing and trading, sales of display card. Co.'s main products are defined in three fields of motherboard, graphic speed-up card and proven system products. Co.'s business operations are carried out in Taiwan, Holland and other countries. Co. exports its products in Asia, Europe, the United States of America, Canada and other countries.

Global Mixed-mode Technology Inc.

Global Mixed Mode Technology is principally engaged in the research, development, manufacture, production and sale of analog and mixed-signal integrated circuits for notebook computers. Through its subsidiaries, Co. is also engaged in securities investment and trading; development, design and sale of consumer electronic products and related technical consultation; and sale of self-developed software. Co.'s major products include power management integrated circuit, temperature measurement integrated circuit and analog devices.

Guangdong Ellington Electronics Technology (A)

Guangdong Ellington Electronics Technology Co.,Ltd. is a China-based company principally engaged in the research, development, manufacture and sale of printed circuit boards (PCBs). The Company's main products include double-sided, four-layered, six-layered, eight-layered and above PCBs. The Company's products are mainly used in communications equipment, consumer electronics, automotive electronics, computers and industrial control industries. The Company distributes its products in domestic and to overseas markets.

Hamamatsu Photonics K.K.

Hamamatsu Photonics is engaged in the manufacture and sale of photomultiplier tubes, imaging devices, light sources, opto-semiconductors, imaging and analyzing systems. Co.'s principal business segments are: Electron Tube; Opto-Semiconductor (Solid State); Imaging and Measurement Instruments (Systems); and Other. Co.'s principal products include photomultiplier tubes, electron multipliers, micro channel plates, image intensifiers, and x-ray products; silicon photodiodes, photo IC components, position sensitive detectors, infrared detectors; and cameras for scientific and industrial applications, as well as specialized instruments for use in fields such as pharmaceutical development.

Mediaset Espana Comunicacion SA

Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.

MEDIATEK INC.

Mediatek is engaged in the research, development, manufacture and sales of multi-media integrated circuit ("IC"), IC for computer peripherals, IC for advanced consumer electronics, IC for other special applications and decoders of optical storage; software application design, testing, maintenance and technical consultation services for IC; the import and export of products related to IC. Co.'s product items include optical storage chipset; CD-ROM chipset and single chip, DVD-ROM chipset and single chip, CD-R/RW chipset, combi chipset; and advanced digital consumer chipset DVD-Player chipset (RF chip, servo controller chip and highly integrated chip).

Mitac Holdings

MiTAC Holdings Corporation is a Taiwan-based investment holding company. Through its subsidiaries, the Company is mainly engaged in the development, design, manufacture, and sales of computers and related peripheral equipment, as well as communications and related products. The Company operates its businesses through two segments. The Cloud Computing Product segment provides workstations, servers, storage devices, enterprise-level servers and workstations, all-in-one liquid crystal display (LCD) personal computers (PCs), Mini PCs, point-of-sale (POS) systems, as well as embedded industrial panel PCs, barebones and embedded motherboards. The Mobile Communications Product segment provides automotive electronics, consumer electronics, enterprise electronics and smart wearable devices, as well as smart navigation and cloud services. The Company distributes its products in domestic market and to overseas markets, such as the United States and Europe.

Nanya Technology Corporation

Nanya Technology and its subsidiaries are engaged in researching, developing, manufacturing and selling semiconductor products; and the import and export business with its machinery, equipment and raw materials. Co. manufactures memory products including dynamic random-access memory ("DRAM") chips, and provision of memory foundry services.

NOS SGPS SA

Nos SGPS is a holding company which is based in Portugal. Through its subsidiaries, Co. operates as a provider of telecommunications and media services. Co.'s subsidiaries main activities are data transmission, cable and satellite television, and internet services.

Pan-International Industrial Corp.

Pan-International Industrial is principally engaged in the development, manufacture and distribution of electronic components, and computer peripheral products and components. Co.'s major products include bulk wire and connectors, cable assembly, printed circuit boards, printed circuit board assembly and turnkey systems assembly. Co. distributes its products within domestic market and to overseas markets include Mainland China, Malaysia and the United States.

Parade Technologies

Parade Technologies is a fabless semiconductor company based in Taiwan. Co. designs, develops and sells display and interface solutions for computing, consumer and handset markets. Co.'s product portfolio includes timing controllers, converters, repeaters, MUX, DeMUX, level shifters and other related solutions. Applications for Co.'s products include desktops, notebooks, monitors, tablets, smartphones and other consumer electronics and display panels.

Schibsted Asa Class A

Schibsted is engaged in the media industry and has four segments: Online classifieds, which include the Norwegian online marketplace and operations outside Norway; Schibsted Norge media house, which includes the media houses VG, Aftenposten, Bergens Tidende, Stavanger Aftenblad and Faedrelandsvennen, printing and distribution operations, and the publishing house Schibsted Forlag; Schibsted Sverige media house, which includes media houses Aftonbladet and Svenska Dagbladet and a portfolio of internet-based growth companies; and Media Houses International, which includes of free newspapers 20 Minutes in Spain and France and Eesti Meedia Group comprising of operations in the Baltic States.

Soitec SA

Soitec is a manufacturer of silicon and integrated circuits. Co. offers products based on Silicon-on-Insulator (SOI), which serves to support the manufacturing of more energy-efficient integrated circuits. Co.'s operations can be divided into three divisions: Electronics, Solar Energy and Lighting. The Electronics division manufactures and sells substrates and components intended for the microelectronics industry; the Solar Energy division manufactures and sells photovoltaic modules, designs and constructs turnkey projects, and operates photovoltaic power plants; and the Lighting division isolates resources to develop materials designed for the production of light emitting diodes.

Telefonaktiebolaget LM Ericsson Class B

Ericsson provides communications technology and services. Co.'s services, software and infrastructure – especially in mobility, broadband and the cloud – enable the telecom industry and other sectors to do business, increase efficiency, improve the user experience and capture new opportunities. Co. has more than 110,000 professionals and customers in more than 180 countries. Co. provides support for networks with more than 2.5 billion subscribers. Co.'s core business areas are called Radio, Core and Transmission and Telecom Services. Co. divides its operations into three business segments: Networks, Global Services and Support Solutions.

Telstra Corporation Limited

Telstra is engaged in providing telecommunications and information services for domestic and international customers. Co.'s operating segments are Telstra Retail, Global Enterprise and Services, Telstra Operations, and Telstra Wholesale. As of June 30 2016, Co. provided retail fixed data services to 3.4 million customers, retail fixed voice services to 5.7 million and domestic retail mobile services to 17.2 million customers.

Tencent Holdings Ltd.

Tencent Holdings Limited is an investment holding company principally involved in the provision of value-added services (VAS) and online advertising services. The Company operates through three main segments. The VAS segment is mainly involved in provision of online/mobile games, community value-added services and applications across various Internet and mobile platforms. The Online Advertising segment is mainly engaged in display based and performance based advertisements. The Others segment is mainly involved in provision of payment related services, cloud services and other services.

Toei Company Ltd.

Toei is mainly engaged in the production and distribution of motion pictures and TV programs. Co. operates businesses including movie, distribution-related, event-related, tourism and real estate, and architectural interior. Co. is involved in the production of TV movies, theatrical movies, videotapes, TV programs and TV commercials; the distribution of domestic/foreign pictures; the provision of advertising agency services; the sale of broadcasting rights of theatrical and TV movies; the operation of theaters, cinema complexes, movie amusement facility, hotels and golf courses; and the provision of store construction and interior decoration services.

Tokyo Electron Ltd.

Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.

Topco Scientific Co. Ltd.

TOPCO SCIENTIFIC CO., LTD. is a Taiwan-based company principally engaged in the distribution of semiconductor related products. The Company provides semiconductor materials, including silicon wafers, solar silicon wafers, thermal couples, fluoro thermoplastics, polished wafers, epitaxy wafers, reclaim wafers, insulating materials and others, as well as liquid crystal display (LCD)/electronic materials and optoelectronic products, including light emitting diode (LED) chips, liquid crystal module (LCM) processing equipment and other products. The Company is also involved in environmental protection business, as well as the provision of solar related products. The Company distributes its products primarily in domestic market.

TPK Holding Co. Ltd.

TPK Holding is a transparent projected-capacitive (P-cap) touch solution provider based in Taiwan. Co. is engaged in offering a full suite of touch solutions tailored to different customer requirements. In addition to a wide variety of product applications and multifaceted solutions, Co. is also engaged in equipping with touch panel technology. Co.'s products include various types of structure, such as Glass-Glass (GG), Glass-Film-Film (GFF) and Single Glass Solution (SGS), which includes One Glass Solution (OGS), Touch-on-Lens (TOL), and Glass-Film (G1F) etc. Co.'s customers include global mobile, personal computers, or PCs, and consumer electronics device innovators.

Tripod Technology Corp.

Tripod Technology is principally engaged in the design, manufacture and distribution of printed circuit boards ("PCBs"), electronic cash register, and computerized production equipment. Co. provides double-sided PCBs and multilayer PCBs, which are applied in the manufacture of personal computers and peripheral products, communication products, industrial instruments, consumer electronic products and automobile products.

Village Roadshow

Village Roadshow is principally engaged in the theme park and water park operations, cinema exhibition operations, film and digital versatile disc distribution operations. In addition, Co. had an equity-accounted 50.17% interest in Village Roadshow Entertainment Group Limited which has film production activities, as of June 30 2016.

Vivendi SE

Vivendi is an audiovisual group active in the entertainment industry with activities in music, TV, cinema, mobile, fixed and internet, and games. Co.'s operations are divided into five businesses: Canal+ Group which produces and distributes pay-TV in France, analog or digital, and is involved in film making; Universal Music Group which sells recorded music (physical and digital media); GVT which serves as a telecommunication operator for fixed ultra high-speed broadband, fixed-line telecommunications and Pay-TV in Brazil; SFR which is engaged in mobile phone services in France, as well as fixed and ADSL services; and Other Activities which involves ticketing, Wengo and Watchever.

Win Semiconductors Corp.

WIN Semiconductors is principally engaged in the research, development, manufacture and sale of gallium arsenide waters. Through its subsidiaries, Co. is also engaged in the market research; receive retail and customer orders from European, North America and Australia regions; and other investment activities. Co.'s major products include power amplifier and radio frequency switch chips used in mobile communication devices such as smartphones. Co. distributes its products primarily in domestic and overseas market, including Asia, Europe and the Americas.

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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