| Sector |
Personal Goods |
Last closing price
(18/05/2009) (p) |
459.75 |
| 52 week High/Low (p) |
528/380 |
| Market Cap (£mn) |
954.42 |
Sector weight age by
Market Cap (%) |
27.83 |
| Average Volume (k) |
745.5 |
| P/E ratio (TTM) |
24.43 |
Industry P/E
ration (TTM) |
3.17 |
TTM: Trailing Twelve Month
Daily chart (SSL.L)
Business background and investment rationale
SSL International PLC (SSL) is a consumer products company with a diverse portfolio including the global brands Durex and Scholl, as well as locally owned companies such as Meltus, Medised and Syndol in the UK and Sauber and Mister Baby in Southern Europe.
Strong sales and double digit operating profit growth
In a trading update in April 2009 SSL expects total reported sales for the period up to 31 March 2009 to be approximately £640m. This is more than 20% ahead of last year, or 6% on an underlying basis after adjusting for favourable foreign currency movements. Branded consumer sales are expected to reach an estimated £577m, showing an underlying sales growth rate of over 6%. This increase has been driven by continuing strong growth in the major categories of Durex, Scholl Footcare and Scholl Footwear. Durex has benefited from good growth in the condom business and another strong performance from the Durex Play range, which reflects the launch of Play O and the continuing advance of the Durex Play Massage range. Scholl Footcare has performed well due in part to the success of Scholl Perfect Nail Treatment and the initial roll out of the Scholl Biomechanics range. Scholl Footwear benefited from strong growth in Asia, coupled with solid performance in the major European territories. SSL is confident it will achieve double digit operating profit growth by March 2009 from investment in innovative new product developments, expanding distribution into new and developing territories and continued focus on cost control.
Improvement in operating margin
SSL restructured the European supply chain by transferring production to the company’s existing facilities in Thailand and India. This rationalisation of manufacturing capacity saw SSL’s gross profit margin hit 60.8% compared with 60.3% in prior year. The improvement was also supplemented by profit generation from Durex, Scholl and other brands. Weakness in the pound against dollar and euro will also improve operating margins.
Technical outlook
On daily chart, SSL is trading in the range of 450.0p and 500.0p with a small correction with upside trend intact. Stock has strong support near 450.0p and resistance near 500.0p. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) has cross below 26 day EMA, indicating correction. 14 day RSI (relative strength index) is above 50 showing strength in trend. 14 day positive DMI (directional moving index) is below 14 day negative and DMI is near 20, indicating consolidation. Stock is also above 20 day and 50 day EMA which supports strength in trend.
Trading strategy
The stock can be bought around 449.0p with a profit target 500.76p and stop loss of 426.49p. (Hedge position: short position in spread betting with £2.78 bet per point).
| Sector |
General Finance |
Last closing price
(18/05/2009) (p) |
399.5 |
| 52 week High/Low (p) |
673.5/197 |
| Market Cap (£bn) |
2.47 |
Sector weight age by
Market Cap (%) |
5.46 |
| Average Volume (mn) |
2.78 |
| P/E ratio (TTM) |
15.59 |
Industry P/E
ration (TTM) |
3.43 |
TTM: Trailing Twelve Month
Daily chart (IAP.L)
Business background and investment rationale
ICAP PLC is a voice and electronic inter-dealer broker which also provides global market information and commentary for professionals in the international financial markets. It is active in the wholesale markets in interest rates, credit, energy, foreign exchange and equity derivatives.
Organic growth in interest rate and credit markets
In an interim management statement in February 2009 ICAP delivered outstanding results in busy markets. In spite of significantly adverse exchange rates, the company benefited from higher volatility in the interest rate, foreign exchange and credit markets. ICAP expects to take advantage of the substantially increased issuance of government bonds, particularly in the US and Europe. A new market has been created with the issuance of securities through the Temporary Liquidity Guarantee Program (TLGP). Up to February 2009 about $150bn of combined fixed and floating rate securities has been issued; it is anticipated to rise to $600bn as a result of the current financial crisis. January 2009 proved to be a bumper month for ICAP in the credit markets with new issues of investment grade corporate benchmarks issued in Europe, while $60bn of investment grade debt was priced in the US. The volatility in exchange rates and foreign exchange’s lack of correlation with other traded products kept volumes high in the market, which only really slowed in recent months.
Cost cutting and new investment
ICAP has maintained it’s focus on costs and taken advantage of a number of opportunities in both voice and electronic broking to reduce costs by $38m. The cost reductions will be spread over two years with a $15m saving this year and a further $23m in 2009/2010. These savings partially offset a $40m investment in building new business through attracting high quality people and acquiring some assets at appealing prices. The group continues to be highly cash generative to support these initiatives and also benefit’s from a strong balance sheet.
Technical outlook
ICAP is trading above positive slope and consolidating between 350.0p and 400.0p. MACD is positive and 12 day EMA below 26 day EMA indicating consolidation and RSI is above 50 indicating strength in trend. 14 day DMI is near 27 indicating strong upside strength. Stock is also above 20 day and 50 day EMA which supports strength in trend. If stock sustains 400.0p a higher move can be expected.
Trading strategy
The stock can be bought around 390.0p with a profit target 434.96p and stop loss of 370.44p (Hedge position: short position in spread betting with £3.2 bet per point).
Reckitt Benckiser PLC
On daily chart, Reckitt was trading in a range of 2600.0p and 2748.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating strength in uptrend. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative and DMI is near 20, indicating consolidation. Stock is also above 20 day and 50 day EMA which supports strength in trend. Looking at no movement for the whole week in the stock, profit should be booked at 2730.0p.
BG Group PLC
BG Group is trading above positive slope and making a higher low indicating a bullish move with a strong support at 1000.0p and immediate resistance of 1100.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating strength in uptrend. 14 day RSI is above 50 showing strength in trend. 14 day DMI is near 23 indicate uptrend. Stock is also above 20 day and 50 day EMA which supports strength in trend. If stock sustains above 1100.0p, profit should be booked at 1125.0p.
Important Information
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.
The report is provided solely for your information and may not be reproduced or redistributed, in whole or in part to any other person without specific consent of CSS Partners.
In the preparation of this report, CSS Partners has had access to publicly available information and other sources believed to be reliable. Whilst reasonable care has been taken to ensure that the facts stated herein are accurate and that the recommendations, forecasts, opinions and expectations contained herein are fair and reasonable, neither the author, nor CSS Partners, nor CSS has verified the public information upon which this is based. None of the author, CSS Partners, CSS or any of their respective directors, officers or employees (the “Parties”) makes any representation or warranty, express or implied as to soundness of the recommendation, the accuracy or completeness of the information or opinions contained herein. Investors must make their own investment decision and not rely on this report. The Parties shall not be liable for any loss, costs, liability, expenses (together “losses”) suffered by you following your utilising any of the services we provide other than losses arising directly as a result of fraud or wilful default on our part or as a result of any liability that may not be excluded under the UK regulatory system. In no event shall we be liable for special, indirect or consequential damages of any kind, even though we may have been informed about the possibility of such loss. You shall indemnify us and our officers and employees on demand and keep all such persons indemnified against all losses which may be incurred directly or indirectly by reason of or in consequence of providing this service save to the extent that such losses arise directly as a result of our, fraud or wilful default.
Any opinions, forecasts or estimates herein constitute a judgment as at the date of this report. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. This information is subject to change without notice. It may be incomplete or condensed and it may not contain all material information concerning the Company. This document does not constitute or form part of and should not be construed as any offer for sale or purchase of (or solicitation of or invitation to make any offer to buy or sell) any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.
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.
There is considerable risk operating in equity, futures, options and spread betting markets and investors need to be able to sustain a total loss of capital along with unlimited liability. Potential investors are recommended to consult a financial adviser before entering into such positions.
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.
In accordance with section 12.4 of the FSA’s New Conduct of Business Rules, CSS Partners makes the following disclosures:
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.
The research analyst responsible for the content of this research report certifies that: the views expressed and attributed to the research analyst or analysis in the research report accurately reflect his personal assessment about the subject securities and issuers and/or other subject matter as a appropriate and no part of his compensation was, is or will be, directly or indirectly related to the specific recommendations or views contained in this research report. On a general basis, the efficacy of recommendations is a factor in the performance appraisals of analysts.
The analyst is not involved in any other activity of CSS Partners or CSS that is inconsistent with his objectivity in preparing the reports. His research information is confidential, the only persons privy to this data bar the analyst are senior management. The research recommendations will be updated, but neither CSS nor CSS Partners accept any responsibility for any delay or interruption of service in the submission of reports or updates to reports.
Distribution of recommendations for the period 1st October to 19th December 2008:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
100% |
22 |
| Hold |
0 |
0 |
| Sell |
0 |
0 |
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.
Your attention is also directed to the terms of our client agreement with you that covers the provision of this service. To the extent that there is any conflict between the above and the client agreement, the provisions of the above disclaimer will take priority.
