CSS Partners FTSE350 Market Report

Market Report

15 September 2008

Thomson Reuters PLC
TRIL.L

Sector	Media
Last closing price (15/09/08) (p)	1400
52 week High/Low (p)	1934.2/1132.0
Market Cap (£bn)	12.49
Sector weight age by Market Cap (%)	5.806
Average Volume (mn)	1.839
P/E ratio (TTM)	–
Industry P/E ration (TTM)	8.12

TTM: Trailing Twelve Month

Daily chart (TRIL.L)

Business background and investment rationale

Thomson Reuters PLC delivers electronic information and decision support tools to businesses and professionals. It provides content and technology platforms to customers in the financial, legal, tax and accounting, healthcare and scientific sectors.

Negative outlook for finance industry

Thomson Reuters Markets division, which represented 60% of revenue in 2007, has seen a slow down in growth from 9% in Q1 to 7% in Q2, as big financial institutions reduce spending on market data and news during the market turmoil. Retrenchment in head count will impact demand for terminal numbers, while price negotiations for euro-based terminal contracts will dent profits for the company.

Completion of share buyback

Thomson Reuters is unlikely to continue buying back its shares once the current $500 million buyback program ends, having already bought back around $450 million of stock since the merger. Share price has been supported by the $500 million share buyback program, which is almost complete, and with this support removed, there is further downside risk to the shares.

Technical outlook

On daily chart, Reuters has fallen with a big gap opening after a consolidation at 1500.0p and 1600.0p. MACD is positive, but 12-day has cross below 26-day EMA, indicating it will fall further. 14-day RSI is below 50 and trend is negative. 14-day -DMI have cross above 14-day +DMI, indicating strong downside trend. On stochastic, 3-day fast moving average has cross below 14-day slow moving average, indicating a sell signal. Stock has strong resistance between 1500.0p-1600.0p and support near 1270.0p

Trading strategy

The stock can be sold around 1450.0p with a profit target 1282.8p and stop loss of 1522.6p (Hedge position: Long position in spread betting with £0.8599 bet per point).

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Whitbread Group PLC
WTB.L

Sector	Travel & Lesuire
Last closing price (15/09/08) (p)	1133
52 week High/Low (p)	1791/924
Market Cap (£bn)	2.024
Sector weight age by Market Cap (%)	3.833
Average Volume (mn)	1.626
P/E ratio (TTM)	27.31
Industry P/E ration (TTM)	3.38

TTM: Trailing Twelve Month

Daily chart (WTB.L)

Business background and investment rationale

Whitbread PLC is a hotel and restaurant group managing several brands including Premier Inn, Brewers Fayre, Table Table, Beefeater and Costa Coffee.

Expansion of Premier Inn and Costa Coffee

Premier Inn emerged as the UK’s fastest and largest hotel group after it opened 14 new hotels this year, incorporating 1,157 rooms, and is on course to add 4,000 rooms to the estate this year. For 24 weeks Premier Inn budget hotel chain, which accounts for about 70% of profits, had outperformed the wider hotel market, with total sales up 17.9% and like-for-like sales up 10.2%. Whitbread’s positive growth had been driven by 7.6% additional rooms being sold across Premier Inn’s expanded estate, and revenue per available room (RevPAR) increasing by 5.8%. Costa also had an outstanding year with the number of outlets doubling in the last three years. In the next five years Whitbread is looking to increase the size of Premier Inn by 50% to 55,000 rooms and to double Costa to 2,000 stores.

Restructuring of business

Last year Whitbread sold David Lloyd Leisure and TGI Friday’s to increase its focus on Premier Inn hotels alongside a pub restaurant; a model that generates superior industry returns. To eliminate duplication and better align company interest’s, Whitbread announced it would combine its divisional management teams of the hotels and pub restaurant businesses and outsource its logistics operation to Kuehne & Nagel. These actions will result in annual cost savings of £25 million from 2009/10. Whitbread responded well on food and energy cost inflation by improving operating efficiencies and putting lower cost options on its menus.

Technical outlook

On daily chart, stock has fallen sharply making negative slope and falling below 20-day and 50-day exponential moving average, indicating a bearish move. MACD is negative and 12-day EMA cross below 26-day EMA and stock has strong support near 1100.0p and if it breaches it has support near 1058p. Stock has strong resistance near 1200.0p level and if it rise above resistance can found near 1260.0p.

Trading strategy

The stock can be bought around 1090.0p with a profit target 1215.67p and stop loss of 1035.35p (Hedge position: Short position in spread betting with £1.144 bet per point).

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This report has been issued by CSS Partners LLP (“CSS Partners”). CSS Partners is an appointed representative of Charles Street Securities Europe LLP (“CSS”) which is authorised and regulated by the Financial Services Authority in the UK. It constitutes non-independent “investment research” as contemplated by the FSA Rules and is thus considered a marketing communication. This report was prepared by Kuldeep Bhati who is employed as an analyst at CSS Partners and as such does not conform with the FSA definition of independent investment research and as such is not subject to the rule of not dealing ahead of distribution of the marketing communication and was not prepared in line with the legal requirements for independent communication.

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Risk Factors

There is no certainty that the recommendations will be successful or that they will make money for investors.

There is no certainty that execution prices can be achieved, either in opening or in closing a position.

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Regulatory disclosures

In accordance with the Conduct of Business Rules COBS12.4.7R (i) in the preparation of the report the analyst used price and volume charts provided by independent data suppliers and applied technical analysis tools of investment and trading evaluation in arriving at his recommendations, ii) all recommendations made by the analyst are followed up in subsequent reports until the closure of a position, iii) there is no certainty that any recommendation will be successful or that technical analysis should be used exclusively to arrive at investment decisions.

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CSS, CSS Partners and their respective officers, directors, shareholders and /or partners may have a shareholding in the companies reviewed in this report. They will not have access to this report until it is published, except those responsible for compliance issues concerning this report.
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Distribution of recommendations for the period 1 July to 30 September 2008:

% Distribution of recommendations No of recommendation

Buy 60.8% 17

Hold 0 0

Sell 39.2% 11

The first column displays the % distribution of recommendations made by CSS Partners in this Technical Analysis Trading programme and the second column shows the numbers of such recommendation. Neither CSS nor CSS Partners has any investment banking relationships with any of the companies covered in the Technical Analysis Trading Programme, namely the companies in the FTSE 350 index.

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	% Distribution of recommendations	No of recommendation
Buy	60.8%	17
Hold	0	0
Sell	39.2%	11