O’Neil Capital Equipment Sector Weekly

LATAM Weekly Summary

Please refer to the attached PDF for the full report.

Brazil’s Bovespa benchmark rose 2.9% last week and is now only 3% off highs. It remains in a Confirmed Uptrend with three distribution days. We recommend that investors increase risk in Brazilian equities.
Mexico’s benchmark index was up 2.3% and hit a new 52-week high last week. It remains in a Confirmed Uptrend with three distribution days.
The number of Focus List ideas in Latin America remains at nine. Banco Pan (PMP.BR; BPAN4:BZ) is actionable, while Pet Center (PCC.BR; PETZ3:BZ) is forming the right side of a cup base and is approaching its buy point of BRL 24.10.

Key points from this report:

Mediatek is attempting to break out of a cup base with pivot of TWD 1,010. We would be buyers of Mediatek shares on a break above TWD 1,010. The stock has come under good accumulation recently, driven by positive news flow around its market share gains against Qualcomm (QCOM).
Support level: TWD 915 (50-DMA; 8% below current level).
We believe that 5G, as a growth driver, remains intact as the company continues to benefit from mass-market launches in 2021. Mediatek has already captured more than 40% share in the markets its serves (mainly China) and believes its market share will be much higher this year. In addition, Mediatek is set to benefit from higher 5G penetration of 60% in China, versus 35% globally, in 2021.
Mediatek is one of the best-rated stocks in Taiwan in our coverage. It has a strong mix of fundamental and technical ratings:
- Fundamental ratings: EPS Rank 91 and SMR Rating A.
- Technical ratings: RS line at a new high, strong RS Rating of 87, A/D Rating has turned positive to +15 from -24 three weeks ago.
- Earnings are expected to grow 65% y/y in 2021, per consensus.

Key points from this report:

We are reiterating our buy call on Pidilite as shares broke out to all-time highs from a 13-week consolidation base on above average volume. Leadership in the adhesives segment, focus on a three-tier portfolio, and pioneering in underpenetrated segments like waterproofing and tile and stone solutions will drive future growth.
Strong fundamental ratings: EPS Rank of 81 and SMR Rating of A. We believe that its fundamental profile will be robust aided by double-digit revenue growth and expanding EBITDA margins for FY22 and FY23.
Improving technical profile: RS line has changed character and is trending upward. RS Rating of 48 is expected to improve further on the back of its upward trending RS line. Up/Down Volume ratio of greater than 1 and A/D Rating of A denote strong institutional buying. The 40-WMA has been a strong support level with the stock trading very few times within 15% below that level in the past five years.

Key points from this report:

Buy Navin Fluorine shares. We are reiterating our buy recommendation on Navin Fluorine as shares broke out of a seven-week cup-with-handle base on above average volume.
Strong demand for fluorine products, business model transformation to the high-value specialty chemical and CRAM businesses, and strong revenue visibility will drive growth going forward.
Solid fundamental ratings: Composite Rating 91, SMR Rating A, and EPS Rank 94.
Improving technical ratings: RS Rating 61 and A/D Rating B+. RS line has begun trending upward after about three months in a moderate downtrend. Up/Down Volume ratio has increased over the past five weeks, up to 1.4 in the current week.