Business Background and Investment rationale

Trinity Mirror PLC, along with its subsidiaries, is principally engaged in the publication and printing of newspapers, primarily in the United Kingdom. The Company operates in three business divisions: Regionals, Nationals and Central Costs.

Challenging outlook and slide in revenue

In a trading statement on 30 June 2008 for the nine weeks to 29 June 2008, Trinity Group expects revenues to fall by 1.5% while underlying revenues are expected to drop by 4.5%. Actual advertising revenues over the period for the Regionals and Nationals divisions are expected to fall by 6.0% and 6.5% respectively.
The expected underlying decline in advertising revenues for the Regionals division is broken down by category: display down 1.4%; recruitment down 8.4%; property down 17.1%; motors down 17.5%; and other classified categories down 2.2%. The deterioration of advertising market conditions have reflected the uncertain outlook for the UK economy. The ongoing adverse implications of inflationary cost pressures and the wider implications of the credit crunch sees Group anticipate the full year operating profit to be some 10% lower than expectations. In the challenging advertising environment, management continues to run the cost base tightly and will seek opportunities for further operational efficiencies.

Cancellation of share buyback program

To manage capital structure prudently, Group is cancelling £67 million of the £175 million share buyback program. To date, 35.5 million shares have been acquired at a total cost of £108 million. The Board will consider the appropriate level for the full year dividend later in 2008, when it has better visibility of trading conditions. This move will deteriorate share price further.

Technical outlook

On daily chart, stock is sliding from lows of last year and yesterday made a 52-week low of 103.75p. Most of the indicators show stock is oversold, but is not consolidating at any level, meaning it will fall further. MACD is negative and 12-day EMA has cross below 26 day EMA.14-day RSI is below 30, showing Trinity is oversold; both RSI and MACD are making negative slope with heavy negative volume showing downside on card. Trinity has key psychological support at 100.0p, if it breaches that level it will fall further.

Trading strategy

The stock can be sold around 103.0p with a profit target 87.0p and stop loss of 110.0p (Hedge position: Long position in spread betting with £11.902 bet per point).

Business Background and Investment rationale

Eurasian Natural Resources Corporation PLC is the holding company of a diversified natural resources group with integrated mining, processing, energy, logistical and marketing operations.

Strong iron ore and Ferroalloy prices

In the first quarter this year, Group’s revenue increased significantly on higher prices, particularly in the Ferroalloys and Iron Ore Divisions. In comparison with the corresponding period last year, average prices were higher for all commodities with the exception of alumina. Ferroalloys grew 91%, including an increase of 82% in the average price of high-carbon ferrochrome; iron ore improved 42%; thermal coal was up over three times; electricity was up 24%; while alumina prices linked to LME aluminium declined 10%. Group anticipates strong prices for the current year driven by significant demand for ferroalloys and iron ore, combined with supply issues for the ferroalloys industry, notably in South Africa.

Increase in production volume for iron ore and aluminium

In the first quarter of 2008, the Alumina and Aluminium Division of ENRC extracted 1,276 thousand tonnes of bauxite, an increase of 6.9%. ENRC is to expand alumina production to 1.6 million tonnes in 2008 from 1.5 million tonnes in 2007. In the second quarter, the company will benefit from the acquisition of Serov group, a ferroalloy producer in eastern Russia. This transaction reinforces company position in low-carbon and medium-carbon ferrochrome, with an incremental annual sales volume of approximately 200,000 tonnes. Company is also expanding its mining operations and increase iron ore concentrate capacity by approximately 4 million tonnes per annum by 2010, through an investment totalling US$320 million (US$45 million has already been spent).

Technical outlook

On daily chart, ENRC has breach key support level of 1279.0p with low volume, but large price change indicates trend reversal for the stock. On MACD, 12-day EMA has cross below 26-day EMA, and 14-day RSI is above 50.0 showing downside strength in move with a negative slope. 14-day negative DMI has cross below 14-day negative DMI, indicating a trend is forming downside. Stock has strong resistance near 1538.0p level and if it falls below 1170.0p support can found near 872.0p.

Trading strategy

The stock can be sold around 1250.0p with a profit target of 1080.0p and stop loss of 1324p (Hedge position: Long position in spread betting with £1.4 bet per point).

Whitbread PLC

Whitbread has fallen for the third time from its high above 1300.0p on daily chart and trend is looking downward. It is consolidating between a narrow range of 1270.0 and 1170.0p. MACD is negative and 14-day RSI is below 50. Trend is downward on both of the indicators and a weak sell signal is generated on stochastic and MACD, as 12-day EMA has cross below 26-day EMA. Whitbread should be hold with profit target of 1310.0p and stop loss of 1220.0p

BG Group PLC

BG has risen sharply from lows of 1200.0p to 1307.0p on high oil prices. MACD is negative but 12-day EMA has cross above 26-day EMA, and RSI is just above 50 suggesting rebound in prices. On directional index, positive 14-day DMI has cross above negative 14-day DMI, indicating a small uptrend. Looking at the trend and volatility in oil prices, profit should be book at 1320.0p with a stop loss of 1190.0p

Imperial Energy PLC

On Imperial Energy a positive trend is forming on higher oil prices. It has rebounded from a low of 860.0p acting as strong support for the stock. MACD is making a positive slope, although it is still negative and RSI is below 50.0. On stochastic and MACD weak buy signal is generated. Looking at the volatility in oil prices it is better to exit from the stock at 955.0p.

BATS PLC

BATS has rebounded from a January low of 1660.p. On daily chart it is above oversold as RSI is above 30.0 and MACD is negative placing it near to historical lows of January. On stochastic it is indicating a buy signal. Looking at the trend it is better to exit on this rebound with an exit target of 1800.0p.

Premier Oil PLC

On daily chart Premier has broken above downward trend line joining its 52-week high of 1890.0p, indicating a buy signal. On MACD 12-day EMA has cross above 26-day EMA, indicating a weak buy signal. RSI is below 50 but trend is positive and on DMI indicator an uptrend is forming. Premier oil should be hold with higher profit target of 1650.0p