| Sector |
Software & computer services |
Last closing price
(15/06/2009) (p) |
159.75 |
| 52 week High/Low (p) |
180.25/78 |
| Market Cap (£mn) |
906.78 |
Sector weight age by
Market Cap (%) |
5.19 |
| Average Volume (mn) |
1.32 |
| P/E ratio (TTM) |
8.93 |
Industry P/E
ration (TTM) |
5.88 |
TTM: Trailing Twelve Month
Daily chart (MSY.L)
Business background and investment rationale
Misys PLC develops, manages and licenses a variety of software products and solutions to customers in the financial services and healthcare industries. The company’s business sectors consist of Banking, Treasury & Capital Markets (TCM), Healthcare and Central Services.
Allscripts-Misys will benefit from US stimulus package
Last year Misys completed a merger with Allscripts Healthcare Solutions PLC in the US, creating Allscripts-Misys Healthcare Solutions Inc, of which Misys owns 56.7%. The newly integrated company is among the largest providers of electronic health records and practice management solutions in the US and has a client base of nearly one-third of the nation’s practising physicians. Allscripts-Misys also provides information and connectivity solutions to more than 150,000 physicians, 700 US hospitals and nearly 7,000 post-acute and homecare organisations. Allscripts-Misys is perfectly positioned to capitalise on the US$20bn in federal subsidies and incentives aimed at widening the adoption of electronic health records, which represent the largest source of the company’s revenue. The firm has seen a five-fold increase in subscribers to its Allscripts ePrescribe electronic prescribing software in the months since the federal government announced cash incentives for physicians to use the technology.
Resilient performance by banking division in economic downturn
Misys Banking serves 1,200 banks and financial institutions across 120 countries. With strong recurring revenues and a focus on tier two and tier three banks and financial institutions, the Misys business model is proving resilient in the current economic environment. In an interim management result announced in April 2009 total revenue was £195m, representing a rise of 3% in the third quarter. Total order intake was £121m; up 7% compared to the same period last year thanks to strong growth in Initial Licence Fees (ILF) and Active Server Pages (ASP) orders in Treasury & Capital Markets (TCM), as well as growth in Allscripts-Misys ASP orders. Misys Banking delivered 2% growth to £41m. In the third quarter, total order intake for TCM and Banking on an as-reported basis increased 29%, with combined ILF/ASP order intake up 33% in the period.
Technical outlook
On daily chart, Misys has formed double top between 170.0p and 157.0p, and doubled from its 52 week low of 78.0p. Stock has strong support near 150.0p and resistance near 180.0p and has to hold above 150.0p for higher move. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) has cross below 26 day EMA indicating weakness in uptrend. 14 day RSI (relative strength index) is above 50 showing strength in trend. 14 day positive DMI (directional moving index) is above 14 day negative and DMI is near 20 indicating some consolidation. Stock is also above 20 day and 50 day EMA which supports strength in trend.
Trading strategy
The stock can be bought around 155.0p with a profit target 172.87p and stop loss of 147.3p (Hedge position: Short position in spread betting with £8.06 bet per point).
| Sector |
Travel & Leisure |
Last closing price
(15/06/2009) (p) |
1338 |
| 52 week High/Low (p) |
2058/845 |
| Market Cap (£mn) |
578.65 |
Sector weight age by
Market Cap (%) |
1.31 |
| Average Volume (k) |
299.04 |
| P/E ratio (TTM) |
47.53 |
Industry P/E
ration (TTM) |
0.02 |
TTM: Trailing Twelve Month
Daily chart (GOG.L)
Business background and investment rationale
Go-Ahead Group PLC is based in the UK and provides passenger transport and aviation services. The company operates in three divisions: Bus, Rail and Aviation services.
Inline trading performance by bus and train division
In an interim management statement announced in April 2009, on a like-for-like basis compared to last year, Go-Ahead’s Bus operations increased revenue by 6.6% and passenger numbers by 3.6%, representing similar growth rates to those achieved in the first half of the financial year. In the Rail division, like-for-like growth in passenger revenue ranged from over 5% from Southeastern trains, to close to 10% from London Midland. Passenger numbers increased in all three franchises, ranging from a small increase in Southeastern to almost 5% in London Midland. Go-Ahead is fully hedged for the current financial year at an average of 43.0p per litre, fully hedged for 2010 at an average of 47.0p per litre and 80% hedged for 2011 at an average of 42.0p per litre.
Retention of South Central franchise
Go-Ahead has retained its South Central rail franchise, which starts on 20 September 2009 and will run for five years and 10 months until 25 July 2015. The final year is subject to performance and there is a two-year extension available at the discretion of the Department for Transport. Go-Ahead expects growth to come from an expanded timetable and increased revenue protection measures. Go-Ahead plans to enhance this expansion through further improvements to punctuality, marketing, retailing and a significant number of other initiatives within customer service. The improvements will be supported by capital investment of £76m, of which approximately £50m will be funded by Govia (Go-Ahead’s 65% subsidiary). Go-Ahead expects the first nine months of the new franchise (20 September 2009 to 30 June 2010) to contribute approximately £10m of operating profit to Govia. The group expects the franchise’s average revenue growth, before inflation, over the five years and 10 months to be around 6%.
Technical Outlook
On daily chart, Go-Ahead is making a small channel at its six-month high indicating stock will consolidate between 1300.0p and 1350.0p. For a higher move stock should sustain above 1300.0p. Momentum oscillator MACD is positive, and 12 day EMA is above 26 day EMA indicating strength in trend. RSI is near 65 indicating overbought. 14 day positive DMI is above 14 day negative DMI supporting uptrend. Stock has resistance at 1483.0p and support near 1200.0p.
Trading strategy
Stock can be bought near 1310.0p with a profit target of 1461.04p and stop loss of 1244.32p (Hedg e position: short position in spread betting with £0.95 bet per point).
BATS PLC
BATS was consolidating near 1650.0p making negative trend. MACD is positive and 12 day EMA has cross below 26 day EMA, indicating downtrend. 14 day RSI is below 50 showing weakness in trend. It is also trading below 20 day and 50 day EMA, supporting downtrend. 14 day negative DMI is above 14 day positive DMI indicating formation of downtrend. If stock holds a strong support level of 1650.0p loss should be booked at 1680.0p.
Johnson Matthey PLC
On daily chart, Johnson is trading near support level of 1200.0p and making a lower high of 1265.0p from last week’s high of 1300.0p, indicating formation of downtrend. MACD is positive and 12 day EMA has cross below 26 day EMA indicating downtrend. 14 day RSI is below 50 showing weakness in trend. 14 day negative DMI is above 14 day positive and DMI is near 20 indicating forming downtrend. Stock is above 20 day and 50 day EMA which supports the short term trend is intact for upside. Looking at downtrend and weakness in platinum prices profit should be booked at 1260.0p.
Bellway PLC
On daily chart, Bellway hit the reduced profit target of 675.0p and is again trading near entry point of 640.0p after making a high of 683.0p. Momentum oscillator MACD is negative but 12 day EMA is above 26 day EMA indicating small uptrend. RSI is below 50 indicating weakness in trend. 14 day negative DMI is above 14 day positive DMI supporting downtrend. All positions should be closed for the stock.
Home Retail Group PLC
Home Retail hit the profit target of 269.9p making a high of 272.0p for the week, but the position could be taken at 249.0p, above recommended price of 242.0p. MACD is positive, and 12 day EMA is above 26 day EMA, indicating an uptrend. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative and DMI is near 25 indicating uptrend. Stock is also above 20 day and 50 day EMA which supports strength in trend. All positions should be closed for the stock.
Premier Farnell PLC
The stock missed the stop loss and profit target by a whisker making a low of 123.5p and a high of 144.5p. The stock is again trading around entry price of 130.0p. MACD is still negative, RSI is below 50 and the trend for both indicators is negative. Stochastic is below 20 indicating oversold for the short term. 14 day negative DMI is above 14 day positive indicating downtrend. Looking at high volatility profit should be booked at 135.0p with a stop loss of 123.48p.
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.
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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.
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 January to 31st March 2009:
| |
% 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.
