| Sector |
Software & Computer services |
Last closing price
(12/10/2009) (p) |
1161 |
| 52 week High/Low (p) |
1298/450 |
| Market Cap (£mn) |
414.93 |
Sector weight age by
Market Cap (%) |
1.93 |
| Average Volume (k) |
33.62 |
| P/E ratio (TTM) |
23.58 |
Industry P/E
ration (TTM) |
18.48 |
TTM: Trailing Twelve Month
Daily chart (FDSA.L)
Business background and investment rationale
Fidessa Group PLC supplies multi-asset trading, portfolio analysis, decision support, investment compliance, market data and connectivity solutions for both the buy-side and sell-side globally.
Strong revenue
For the six months to 30 June 2009, Fidessa reported strong growth with revenue up by 36% to £116m from £85m for the same period last year. At constant currencies the revenue growth was 19%. This strong growth was driven by momentum in recurring revenue, which increased to £93.9m from £65.5m in 2008 and now represents 81% of the firm’s total revenue. Fidessa continues to generate cash from operations and the operating cash conversion rate was 170%. Following the acquisition of LatentZero and once 2008’s final dividend had been paid, the cash balance decreased to £25m from £33.1m.
Despite pressure in the financial markets, usage of Fidessa's network has continued to increase with traffic up by over 20% since the end of 2008, reaching approximately 220 million messages a month. This means Fidessa is carrying business flows of around $600bn per month.
Benefit from increased regulations
Following the economic crisis in 2008, the financial industry anticipates increased regulation. The outcome from ongoing regulatory reviews is likely to result in changes to workflow and increased reporting requirements. These changes should benefit Fidessa on both the buy-side and sell-side, as firms look for a leading automated compliance and reporting solution to meet their obligations without incurring substantial costs.
Technical outlook
On the daily chart, Fidessa is making a channel between 1217.0p and 1000.0p with higher lows and stock is near to breakout from its upside range. MACD (moving average convergence/divergence) is negative but 12 day EMA (exponential moving average) has cross above 26 day EMA, indicating an uptrend is forming. 14 day RSI (relative strength index) has cross above 50 showing strength in trend. 14 day positive DMI (directional moving index) is above 14 day negative and ADX (average directional index) is near 20 indicating consolidation. Stock is also above 20 day and 50 day EMA which supports strength in trend. Stock has strong resistance near 1200.0p and support near 1000.0p.
Trading strategy
The stock can be bought around 1140.0p with a profit target 1272.0p and stop loss of 1082.6p (Hedge position: Short position in spread betting with £0.91 bet per point).
| Sector |
Household goods and home construction |
Last closing price
(12/10/2009) (p) |
805.5 |
| 52 week High/Low (p) |
927.5/383.75 |
| Market Cap (£mn) |
966.74 |
Sector weight age by
Market Cap (%) |
3.19 |
| Average Volume (k) |
547.41 |
| P/E ratio (TTM) |
- |
Industry P/E
ration (TTM) |
0.75 |
TTM: Trailing Twelve Month
Daily chart (BWY.L)
Business background and investment rationale
Bellway PLC and its subsidiaries’ principal engagement is house building in the UK. The company is a volume house builder selling primarily in the private market and trading nationally in areas of high population. It also acquires and sells second hand homes taken in part exchange.
On target to increase production
Bellway has changed its focus from simple debt reduction to selectively increasing production in the south of the UK where stock levels have fallen, as well as increasing the number of new outlets. In recent weeks the group has successfully acquired land, predominantly in southern divisions which will deliver attractive margins. By 31 July 2009 Bellway’s bank debt was reduced by £100m from £218m at 31 July 2008. Net bank debt is now at £37m and comfortably within current committed facilities of £370m. In August 2009 Bellway bolstered its cash position by £44.8m after it placed 5% of its ordinary shares with institutional investors.
Stability in home sales pricing structure
With the mortgage market still restricted and cancellation rates running at historically high levels, the group completed the sale of 4,380 homes by 31 July 2009, which was a fall from the 6,556 sold in 2008. The average selling price was £154,000, a drop from the £169,729 average in 2008. To achieve these sales Bellway is giving incentives to customers in the form of cash discounting, part exchange and shared equity. However to bring some stability to the group’s pricing structure, part exchange stock has now reduced to £9.4m from £40.6m at the beginning of August last year. Bellway anticipates that the operating margin will be around 6% - 7% for 2009 and there will be no further asset write-down provided current market conditions continue.
Technical Outlook
On the daily chart, Bellway has given up its recent gain and is again consolidating around 800.0p forming a short-term bottom. It is still trading above the trendline joining the October 2008 low which indicates the long-term positive trend is intact. Momentum oscillator MACD is negative and 12 day EMA is below 26 day EMA indicating weakness in trend. RSI is below 50 indicating weakness in trend. 14 day negative DMI is above 14 day negative DMI but the difference is declining which indicates consolidation. Stock has resistance at 900.0p and support near 720.0p. Stock has to consolidate above 800.0p for an uptrend.
Trading strategy
Stock can be bought near 790.0p with a profit target of 882.0p and stop loss of 750.39p (Hedge position: short position in spread betting with £1.56 bet per point).
WS Atkins PLC
On the daily chart, WS Atkins is still trading in a tight range of 600.0p and 670.0p with MACD still negative and 12 day EMA has cross above 26 day EMA indicating uptrend is forming. 14 day RSI is below 50 showing weakness in trend. 14 day negative DMI is above 14 day positive but falling and ADX is near 20, both of which indicate consolidation. Stock should be a hold with a new profit target of 665.0p.
Imperial Tobacco Group PLC
Imperial’s move above 1800.0p indicates trend for the stock is positive as MACD is positive and 12 day EMA is above 26 day EMA. 14 day RSI is above 60 showing strength in trend. 50 day EMA is still above 200 day EMA supporting an uptrend. 14 day positive DMI is above 14 day negative DMI and ADX is near 20 indicating constant rise in the stock. Stock should be a hold with a new profit target of 1900.0p.
Kesa Electrical PLC
On the daily chart, Kesa hit the reduced profit target of 150.0p and the original profit target of 159.0p after consolidation between 140.0p and 150.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating uptrend. 14 day RSI is above 60 indicating strength in trend. Positive DMI has cross above negative DMI, which indicates a positive trend. All positions should be closed for the stock.
Babcock International Group PLC
On the daily chart, Babcock is rebounding towards its recent high of 598.0p. MACD is positive and 12 day EMA has cross below 26 day EMA indicating a weakness in uptrend. 14 day RSI is above 60 which indicates strength in trend. Positive DMI is above negative DMI which indicates a positive trend. Stock should be a hold with a profit target of 620.0p.
Home Retail Group PLC
On the daily chart, Home Retail has hit the stop loss of 296.13p. MACD is negative and 12 day EMA has crossed above 26 day EMA, indicating an uptrend forming. 14 day RSI is below 50 supporting weakness. 14 day positive DMI is above 14 day negative while ADX is near 20 indicating consolidation. All positions should be closed for the stock.
GlaxoSmithKline PLC
On the daily chart, GlaxoSmithKline has breakout from resistance 1250.0p indicating uptrend. MACD is positive and 12 day EMA has just crossed below 26 day EMA indicating a recent price fall.14 day RSI is near 60 indicating strength in trend.14 day positive DMI is above 14 day negative DMI and ADX is near 26 indicating uptrend. Stock should be a hold with the same profit target.
Logica PLC
On the daily chart, Logica is moving in a positive direction. MACD is positive; and 12 day EMA is still below 26 day EMA, indicating weakness in uptrend. 14 day RSI is below 60 indicating strength in trend. Positive DMI is above negative DMI with ADX rising, indicating a positive trend. Stock should be a hold with reduced profit target of 126.0p.
Serco Group PLC
On the daily chart, Serco made a new 52 week high of 528.0p, but entry could be made only at 489.0p. MACD is positive, and 12 day EMA has just crossed above 26 day EMA, indicating uptrend. 14 day RSI is above 60 showing strength in trend. 14 day positive DMI is above 14 day negative DMI which indicates uptrend is intact. Stock is above 20 day EMA, and 50 day EMA which supports that the long term uptrend is intact. Stock should be a hold with a new profit target of 545.0p.
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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 July to 30th September 2009:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
81% |
21 |
| Hold |
0 |
0 |
| Sell |
19% |
5 |
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.
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