Author: Derek Higa

Derek Higa is a senior equity analyst and a lead for the APAC region and the Consumer Cyclical sector. He serves on the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets, and compiles Asia Watch, a weekly recap of regional investing news. Since joining William O’Neil + Company in 2005, he has lent his market expertise to alpha capture, product development, and historical studies on outperforming stocks. Derek graduated summa cum laude from California State University Los Angeles with a B.S. in Finance and Information Systems. He holds a Series 65 securities license.

APAC Market Update

Posted on August 5, 2019August 5, 2019 by Derek Higa

Key points:

We are downgrading India and Japan to a Downtrend from an Uptrend Under Pressure as both indices have failed to hold above their 200-DMA.
In Japan, a steep decline on higher volume amid trade uncertainty may continue following the global selloff.
Among four Focus List ideas in Japan, Asahi Intecc ( AS@H.JP ), Peptidream ( PETI.JP ), and Recruit Holdings ( RHCL.JP ) are holding up well and trading above their 50-DMA.
Indian markets may continue to decline or stay below the 200-DMA until clarity regarding the surcharge on foreign investors emerges.
Indian Focus List Ideas that are holding up well and trading above their 50-DMA include Asian Paints ( API.IN ), Tata Consultancy Services ( TSE.IN ), and Pidilite Industries ( PID.IN ).
Refer to the note for defensive ideas and stocks with a high O’Neil Negative Alert Score in India and Japan.

APAC Market Update

Posted on August 2, 2019August 2, 2019 by Derek Higa

Key points:

We are downgrading Hong Kong and South Korea to a Downtrend from an Uptrend Under Pressure and Rally Attempt, respectively.
Focus List ideas at risk in Hong Kong include Logan Property Holdings ( LPTY.HK ), AIA Group ( AGP.HK ), and China Tower Corp ( CHTW.HK ).
We recommend trimming positions in extended Focus List ideas in Hong Kong that include Yihai International Holding ( YIHA.HK ), Li Ning ( LNIN.HK ), and Haidilao International Holding ( HAIN.HK ).
We have shifted China, Taiwan, Thailand, and Singapore to an Uptrend Under Pressure from a Confirmed Uptrend.

APAC Weekly Summary

Posted on July 31, 2019July 31, 2019 by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

Of 13 APAC markets, eight are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, and one is in a Rally Attempt. The average distribution day count is becoming elevated at 4.2.
We shifted Hong Kong to an Uptrend Under Pressure today; the distribution day count has risen to four with three recorded in the last four sessions.
Our concern is rising in India. The market is Under Pressure and distribution has risen to elevated levels. We remain cautious as the BSE Sensex 30 and CNX Nifty 50 are testing support at the 200-DMA. Refer to pages 8 and 9 for annotated charts.
In India, large caps are outperforming. A majority of Consumer Cyclical, Energy, and Technology sector stocks are trading below their 200-DMA.
Highlighted Focus List Idea: Asian Paints ( API.IN ). Refer to page 7 for annotated chart.
Refer to page 10 for negative alert ideas in India.
Refer to page 11 for constructive ideas in India.
Refer to page 12 for APAC Actionable Ideas.

Twitter

Posted on July 26, 2019July 26, 2019 by Derek Higa

Key Points:

We are reiterating our Buy recommendation after Twitter reported continued acceleration in monetizable daily active users (mDAU). Q2 mDAU grew 14% y/y after a return to double-digit growth in Q1. Shares are breaking out of an early-stage base. We recommend adding to positions.
Twitter has a three- and five-year revenue growth rate of 8% and 24%, respectively. It has a three- and five-year earnings growth rate of 35% and 64%, respectively.
Fundamental ratings: EPS Rank 99. Composite Rating 88. SMR Rating A.
Technical ratings: RS Rating 66 and A/D Rating C-. Technical ratings are expected to improve given the stock’s strong move after Q2 results.
The number of funds holding Twitter shares has increased to 1,228 as of June 2019, from 1,187 in June 2018.

APAC Weekly Summary

Posted on July 24, 2019July 24, 2019 by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

On July 18, we moved Japan to an Uptrend Under Pressure from a Confirmed Uptrend. Ten of 13 markets are in a Confirmed Uptrend, with Japan and India in an Uptrend Under Pressure and South Korea on day 39 of a Rally Attempt.
The Japan-South Korea trade dispute is in status quo with the decision of whether to remove South Korea from Japan’s preferred trading partners list expected as early as this week. See KOSPI annotations on page 8 and Korean Negative Alerts on page 9.
Australia is trading at all-time highs not seen since November 2007, before the global financial crisis. Basic Material and Consumer Staple stocks have performed well in the near term. Refer to page 10 for ASX All Ordinary Index annotations.
Refer page 11 for notable Australian mining ideas with good Composite Ratings.
Highlighted Focus List Ideas: A2 Milk (

) and Nanosonics (

). Refer to annotated charts on pages 6 and 7.
Refer to page 12 for ideas near trading near pivot in Australia.
Refer to page 13 for APAC Actionable Focus List ideas.

Match Group

Posted on July 18, 2019July 18, 2019 by Derek Higa

Key points:

We are reiterating our Buy Recommendation on MTCH as shares are breaking out to all-time highs from an early stage base. The Company is the market leader in an underpenetrated online dating business with a huge opportunity in Asia. Q2 results are expected on August 7.
Shares are breaking out of a stage-two nine-week flat base on above average volume and are currently actionable.
EPS Rank of 88, Composite Rating of 95, and SMR Rating of A indicate good fundamentals.
RS line is near an all-time high. RS Rating of 97 indicates good technicals.
The number of institutions holding the stock grew 32.2% y/y to 501 in March.

APAC Weekly Summary

Posted on July 17, 2019July 18, 2019 by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

Eleven of 13 APAC markets are in a Confirmed Uptrend. Australia and New Zealand are the two constructive markets in the region.
Concerns about Japan are rising with a clustering of distribution days amid trade tensions with South Korea. We look forward to Japan’s announcement of preferred trading partners on July 24. Refer to page 8 for an annotated chart of the Nikkei 225 Index.
For notable Japan ideas with high negative alert counts see pages 9 and 10.
Southeast Asian markets remain in a Confirmed Uptrend. Small-cap stocks are leading in the region. Refer to pages 11 and 12 for annotated index charts for Thailand and the Philippines.
Consumer-facing stocks are performing better than the broader market in Southeast Asia. Refer to page 5 for consumer ideas near pivots.
Highlighted Focus List Idea: Bank Central Asia ( BCA.ID ). Refer to page 7 for annotated chart.
Refer to page 13 for other notable ideas from Southeast Asia.
Refer to page 14 for APAC Actionable Ideas.

Walt Disney Company

Posted on July 11, 2019July 11, 2019 by Derek Higa

Key points:

Shares broke out of a second-stage seven-week cup base on above average volume and are currently actionable. Following Disney’s investor conference on April 11, it gapped up 10% to an all-time high, breaking out of a 40-month consolidation.
With strong performance expected from studio entertainment this year, the expansion of its parks and resorts, and the planned rollout of Disney+, we expect revenue growth to be strong in Q2 and beyond.
Good fundamental ratings: Composite Rating of 79, SMR Rating of B, and EPS Rank of 59, which is affected by the Company’s investment in its DTC platform.

Good technical ratings: RS line trending upward with an RS Rating of 94 and an A/D Rating of B.
Institutional sponsorship has increased steadily to 3,672 (12% q/q; 26% y/y) as of March 2019.

APAC Weekly Summary

Posted on July 10, 2019July 10, 2019 by Derek Higa

Key points from this week’s report:

Please refer to the attached PDF for the full report.

Eleven of 13 APAC markets are in a Confirmed Uptrend. The average number of distribution days has increased slightly to 2.6.
Reaction to India’s budget has been a drag on the market. We shifted India to an Uptrend Under Pressure as weakness broadened across sectors. We recommend a cautious approach. Refer to page 6 for an annotated Sensex Datagraph™.
See page 7 for Indian ideas with high negative alert scores.
Indian Financial ideas have performed relatively better. NBFC, including Focus List ideas HDFC ( HDF.IN ) and Bajaj Finance ( BJF.IN ), have benefited from the Indian budget.
Highlighted Focus List idea: Bajaj Finance ( BJF.IN ). Annotated chart on page 5.
Refer to page 8 for actionable Focus List ideas.

Chegg Inc

Posted on July 8, 2019July 9, 2019 by Derek Higa

Shares broke out of a stage-two 16-week consolidation base on higher volume and are currently actionable.
Best-in-class fundamental ratings: EPS Rank of 99, Composite Rating of 99, and SMR Rating of A.
Good technical ratings: RS Rating of 93 and A/D Rating of B+
The number of institutional holdings was 465 (+38% y/y) in June 2019.