| Sector |
Mining |
Last closing price
(27/07/2009) (p) |
250.25 |
| 52 week High/Low (p) |
529.45/76.49 |
| Market Cap (£bn) |
1.8 |
Sector weight age by
Market Cap (%) |
0.664 |
| Average Volume (mn) |
3.27 |
| P/E ratio (TTM) |
- |
Industry P/E
ration (TTM) |
31.51 |
TTM: Trailing Twelve Month
Daily chart (AQP.L)
Business background and investment rationale
Aquarius Platinum Limited is engaged in the exploration, development and acquisition of platinum group metals (PGM) including Platinum, Palladium, Rhodium and Gold. Its PGM mining and exploration operations take place in South Africa and Zimbabwe, with administration functions in Australia and Bermuda.
Improvement in production
In a half year result announced in February 2009, group production rose to 260,208 PGM ounces; 17% higher than the previous six months to June 2008. However it was 6% lower when compared to the six months to December 2007 due to a temporary production suspension at Everest following an early detection of subsidence. At the start of the financial year, Aquarius was targeting a 2009 annual production of 575,000 PGM ounces, representing an increase of approximately 15% on the previous year.
Rebound in metal prices
In a first half year result of 2009, Aquarius reported significant falls in PGM prices with Platinum prices during this period being 56% lower at $904 per ounce compared to the six months to December 2007, while Rhodium prices were 87% lower at $1,250 per ounce. Palladium was 60% lower at $184 per ounce and Gold was 6% lower at $866 per ounce. In the second half of 2009, Aquarius is set to benefit from higher commodity prices as platinum prices rebounded from a year low of $774 in November 2008 to $1186 per ounce in July this year. Palladium prices also rebounded from a year low of $161 to $259. Jewellery has seen some reduction in demand, yet requests from platinum autocatalysts and ETFs(Electronic trade funds) in particular have seen significant growth on strong Chinese auto industry rebound and dollar falls against the euro and sterling.
Technical outlook
On daily chart, Aquarius is making a ‘V’ pattern in a range of 170.0p and 316.0p, with a higher low indicating strong uptrend. MACD (moving average convergence/divergence) is negative and 12 day EMA has cross above 26 day EMA indicating formation of upside trend. 14 day RSI (relative strength index) is near 60 showing strength in trend. ADX (average directional index) is near 26 indicating strong positive trend. Stock is also above 20 day and 50 day EMA which supports strength in trend. For a higher move stock has to move above 250.0p with some consolidation as stochastic indicating overbought. The stock has immediate resistance near 268.0p and support near 220.0p.
Trading strategy
The stock can be bought around 245p with a profit target 273.24p and stop loss of 232.7p (Hedge position: short position in spread betting with £5.09 bet per point).
| Sector |
Travel & Lesuire |
Last closing price
(27/07/2009) (p) |
321.75 |
| 52 week High/Low (p) |
393.25/235.5 |
| Market Cap (£bn) |
5.79 |
Sector weight age by
Market Cap (%) |
14.13 |
| Average Volume (mn) |
15.82 |
| P/E ratio (TTM) |
12.51 |
Industry P/E
ration (TTM) |
6.08 |
TTM: Trailing Twelve Month
Daily chart (CPG.L)
Business background and investment rationale
Compass Group PLC is a contract food service company providing a range of consumer-facing food service solutions to its clients in 70 countries. It operates in North America, Continental Europe, the United Kingdom and the rest of the world.
Strong revenue growth and expansion in margins
In an interim management result announced last week Compass’ revenue grew 1.8% on a constant currency basis. Organic revenue growth (which is the combination of net new business and like for like revenue growth) was 0.8%for the first nine months of the year. The continued focus on the MAP (Management & Performance) framework has helped the group to accelerate operating and overhead efficiencies and deliver strong margin improvement in the third quarter of the year of around 50 basis points, with all four geographic segments contributing to this strong performance. In addition, the weakening of sterling against the dollar and other currencies made a favourable impact of around £105m on operating profit for the nine months to 30 June 2009.
Mergers and acquisition
Compass is focused on the significant market opportunity to grow it’s core food service business organically. In addition, the firm is continuing to make value-creating acquisitions and buy-outs. In June, Compass acquired Lackmann Culinary Services in North America, with a gross asset value of $8m. Further, a joint venture with celebrity chef Wolfgang Puck in the USA has increased the group’s stake in this business to 90%. Compass is making good progress in developing a support services business; the integration of the recently acquired Kimco in the USA and Plural in Germany is progressing well and giving Compass real leverage in comprehensive multi services (food and support services) and Healthcare.
Technical outlook
On daily chart, Compass is looking oversold on last week’s sell-off following the interim result. MACD is negative and 14-day RSI is around 30 showing oversold. ADX is above 25 and negative 14-day DMI is above positive 14-day DMI showing strong downtrend. Stochastic oscillator is also showing oversold. Stock has resistance near 350.0p level and support near 281.0p.
Trading strategy
The stock can be bought around 315p with a profit target 351p and stop loss of 299.2p (Hedge position: Short position in spread betting with £3.93 bet per point).
Babcock International PLC
On daily chart, Babcock has rebounded for a fourth time from a high of 492.0p indicating that the channel between 450.0p and 500.0p is intact, giving a sell signal and is supported by trading below 20 day and 50 day EMA. MACD is negative and 12 day EMA is above 26 day EMA indicating recent upwards move. 14 day RSI is also below 50 indicating weakness in trend and negative DMI is crossing above positive DMI, which indicates a negative trend. Stock has to break resistance of 450.0p for a lower move. Stock should be a hold with same profit target of 450.0p.
FirstGroup PLC
On daily chart, FirstGroup’s downward trend has decreased with stock trading near entry point for a whole week. MACD is negative and 12 day EMA has cross above 26 day EMA indicating a positive trend is forming. 14 day RSI is increasing and near to 50 indicating weakness in downtrend. Negative DMI is above positive DMI, which indicates a negative trend, but ADX is flat indicating consolidation. Stock has support between 314.0p and 330.0p and resistance at 360.0p. Looking at lack of movement in stock it should be a hold with a new profit target of 360p and stop loss of 322.0p.
Misys Group PLC
On daily chart, Misys has breakout upside from its 52 week high of 180.0p making a new high of 187.5p but it couldn’t sustain that level. MACD is still positive and 12 day EMA is above 26 day EMA indicating some strength. 14 day RSI is near 60 showing strength in trend. ADX is near 20 indicating consolidation. Stock is also above 20 day and 50 day EMA which supports strength in trend. For a higher move stock has to move above 180.0p with higher volume. The stock should be hold with a new profit target of 185.0p.
WS Atkins PLC
On daily chart, Atkins traded to 679p near to its profit target of 679.21p; stock has rebound from that high and trading near 650p. MACD is still positive, and 12 day EMA is above 26 day EMA indicating strength in uptrend. 14 day RSI is below 70 showing strength in trend. 14 day positive DMI is above 14 day negative and ADX is near 24 indicating uptrend. Stock is also above 20 day and 50 day EMA which supports strength in trend. Stock should be a hold with same profit target of 679.21p with a new stop loss of 586.6p.
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.
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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.
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 April to 30th June 2009:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
95.5% |
21 |
| Hold |
0 |
0 |
| Sell |
4.5% |
1 |
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.
