| Sector |
Support services |
Last closing price
(22/06/2009) (p) |
524.5 |
| 52 week High/Low (p) |
745/342 |
| Market Cap (£bn) |
1.39 |
Sector weight age by
Market Cap (%) |
2.81 |
| Average Volume (mn) |
1.76 |
| P/E ratio (TTM) |
11.21 |
Industry P/E
ration (TTM) |
2.71 |
TTM: Trailing Twelve Month
Daily chart (AGK.L)
Business background and investment rationale
Aggreko PLC provides electrical power and temperature control to customers who need them quickly, or for a short or indeterminate length of time. The company operates globally with 133 service centres and offices in 31 countries.
Strong start in 2009
In an interim management statement announced in April 2009 the group had a strong start to the year with total revenues in the three months to 31 March 2009 growing by 42%. On a constant currency basis and excluding pass-through fuel, group revenues grew by 17%. Local businesses were trading at similar levels to last year, while the International Power Projects business grew by 51%. The strong performance by International Power Projects was mainly due to an increase in the number of megawatts on rent coupled with benefits of year-on-year improvement in rates as well as more gas-powered units on rent than in the previous year.
Debt reduction and strong outlook for 2009
In the first three months to 31 March 2009, net debt decreased by £37m to £327m and was £94m higher than at 31 March 2008. Aggreko invested £260m over last 12 months, reflecting the business’ very strong operating cash flow. With total facilities of £568m and £195m of refinancing/replacement of facilities recently completed, Aggreko has ample headroom to finance the needs of the business. The group expects to deliver a strong first half, despite tougher conditions in the local businesses, and will benefit in the strengthening of dollar against sterling because 70% of the group’s earnings is in dollar.
Technical Outlook
On daily chart Aggreko has fallen 21% from its May 2009 highs but is up by 54% from its March 2009 low. MACD (moving average convergence/divergence) is negative and 12 day EMA (exponential moving average) is below 26 day EMA indicating sell signal. Stock prices are also trading below 20 and 50 day EMA confirming negative trend, but stock recently climbed above 200 day EMA indicating long term uptrend intact. RSI (relative strength index) and stochastic are near to 30 indicating stock is oversold. Negative DMI(directional moving index) is above positive DMI indicating negative trend. Stock has resistance at 560p and support at 470.0p
Trading Strategy
Stock can be bought around 510.0p with a profit target of 568.8p and stop loss of 484.53p. (Hedge position: Short in spread betting with £2.45 bet per point)
| Sector |
General retailers |
Last closing price
(22/06/2009) (p) |
106 |
| 52 week High/Low (p) |
182/59 |
| Market Cap (£mn) |
593.1 |
Sector weight age by
Market Cap (%) |
2.21 |
| Average Volume (mn) |
4.07 |
| P/E ratio (TTM) |
- |
Industry P/E
ration (TTM) |
0.35 |
TTM: Trailing Twelve Month
Daily chart (KESA.L)
Business background and investment rationale
Kesa Electricals PLC is a holding company with independent subsidiaries operating through 690 stores in nine European countries. The company’s principal activity is retail of electrical goods and furniture.
Restructuring business
In a trading statement announced in May 2009 total group revenue increased by 5.6% in sterling and declined 4% in local currency, down 7.5% on a like for like basis for the period 9 January to 30 April 2009. Given the weak trading conditions Comet has taken actions to improve its operational efficiency. These include the consolidation of distribution and service centres plus a reduction in head office employees. An exceptional charge of approximately £9m will be taken in the year just ended, with annualised cost savings expected to be approximately £14m. Menaje del Hogar faced extremely difficult market conditions in Spain which means Kesa expects retail losses for this business to be higher than anticipated, at around €26m. Restructuring plans to substantially reduce losses in the coming year are in progress, including the closure of one warehouse and distribution centre, streamlining the head office functions, store closures and a reduction in the number of staff working in the remaining store chain. These actions are expected to generate annualised cost savings of approximately €11m and contribute to a reduction in the retail loss for the coming financial year. Recently Kesa confirmed that it has entered into exclusive negotiations with Swiss electrical retailing chain FUST, regarding the sale of its Swiss operations for CHF 20m (£11.4m). The sale will not result in a loss for the group.
Technical outlook
On daily chart stock has form a double top between 134.0p and 108.0p with lower highs indicating negative trend forming. There is strong trend forming in negative direction as ADX (Average Directional moving index) is near 20, declining and negative DMI is above positive DMI. 14 day RSI is near to oversold zone and MACD is negative, trend for both indicators are declining. It is also trading below 20, 50 and 200 day EMA confirming downward trend. Stock has resistance near 128.0p and support at 94p. If stock falls below 100.0p it can fall further to 94.0p
Trading strategy
The stock can be sold around 109.0p with a profit target 96.43p and stop loss of 114.46p (Hedge position: Long position in spread betting with £ 11.46 bet per point)
BATS PLC
BATS has hit reduced loss target of 1680.0p and was consolidating between 1650.0p and 1700.0p. MACD is positive and 12 day EMA has cross above 26 day EMA, indicating uptrend. 14 day RSI is above 50 showing strength in trend. It is also trading above 20 day and 50 day EMA, supporting uptrend. 14 day positive DMI is above 14 day negative DMI indicating formation of uptrend. All position should be closed for the stock
Johnson Matthey PLC
On daily chart, Johnson hit stop loss of 1177.8p and making a low of 1100.0p. MACD is negative 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 ADX is near 20 indicating forming downtrend. Stock is below 20 day and 50 day EMA which supports downtrend. All position should be closed for the stock
Premier Farnell PLC
The stock hit the stop loss of 123.48p last week making high of 130.0p. Stock is in consolidation phase in a range of 123.0p to 130.0p with a negative trend. MACD is 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. All position should be closed for the stock.
Misys PLC
On daily chart, Misys hit profit target of 172.87p and trading near 170.0p. MACD is positive and 12 day EMA is below 26 day EMA indicating consolidation near 170.0p. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative and ADX is above 27 indicating strong uptrend. Stock is also above 20 day and 50 day EMA which supports strength. All position should be closed for the stock.
Go-Ahead group PLC
On daily chart, Go-Ahead hit stop loss of 1244.32p, as it couldn’t hold 1300.0p. Momentum oscillator MACD is positive, and 12 day EMA is below 26 day EMA indicating weakness in trend. RSI is below 50 indicating downtrend. 14 day negative DMI is above 14 day positive DMI supporting downtrend. All position should be closed for the stock
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.
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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.
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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.
