Pair trade asml vs cap gemini (2)Document Transcript
Pair Trade: Long ASML - Short Cap Gemini Monday, October 22nd 2012Companies Description Investment Case ASML Holdings has recently underperformed after guiding towards Q4 orders weakness. Softness in the PC industry and macro challenges, which caused DRAM prices to fall, was probably the key driver. We acknowledge the low visibility on this issue over the next few months.Market Price Data However, in the European technology sector, ASML could remainASML Holdings (ASML NA) attractive. The Intel-Samsung-TSMC deal and the recentlyLast Price (€) 41.235 announced Cymer acquisition seem to provide revenue and marginYTD Change 25.23% upside at the next cyclical peak. Cymer is their laser source supplier.Mkt Cap (€ bn) 20.149 ASML intends to increase efficiency and simplify the supply chain.Cap Gemini (CAP FP) The Intel-Samsung-TSMC deal is a customer co-investment programLast Price (€) 31.495 for the development of some technologies. At the same time, thoseYTD Change 30.9% companies are expected to buy an equity stake in ASML. Intel agreedMkt Cap (€ bn) 5.113 to buy a 15% stake.Source: Bloomberg Cap Gemini: Last week’s IBM Q3 miss on revenues could have a negative read-across to Euro IT Services. GBS revenues growth (moreAnalysts Recommendations: relevant to Cap Gemini) was negative Q/Q, slowing down from the previous quarter. The booking was also down. Q3 revenues will be reported at November 8th. Higher competition and economic weakness (mainly in Europe) should be considered. Nonetheless, the shift to offshore locations should allow the company to reduce its costs. With expectations that don’t seem very demanding, we’ll prefer to close the pair trade before Cap Gemini ´s Q3 Revenues announcement. The ASML/Cap Gemini has a current relative ratio value of 1.309. We will define our target at 1.375 and our stop-loss at 1.265.Source: Bloomberg Technical CommentNext Report Date Q4 and Annual January 17th,ASML Results 2013 November 8th,Cap Gemini Q3 Revenues. 2012Source: Bloombergwww.fincor.ptwww.facebook.com/FincorAnnouncement: Fincor—Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders. The contents men-tioned in this document do not constitute (nor should they be interpreted as to form) any kind of counselling, or investment recommendation, or arecord of our trading prices, or an offer or solicitation to trade in any financial instrument. Fincor—Sociedade Corretora, S.A. Will not accept anyresponsibility resulting from any use referring to said content or about any resulting effect that could have occurred.