| Sector |
Mining |
Last closing price
(16/11/2009) (p) |
314 |
| 52 week High/Low (p) |
323.9/86.73 |
| Market Cap (£bn) |
2.44 |
Sector weight age by
Market Cap (%) |
0.618 |
| Average Volume (mn) |
2.14 |
| P/E ratio (TTM) |
– |
Industry P/E
ration (TTM) |
68.85 |
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. It has PGM mining and exploration operations in South Africa and Zimbabwe, with administration functions in Australia and Bermuda.
Improved pricing for PGM
In a first quarter result for 2009/2010 announced in August, Aquarius reported net profits of $9.5m which equated to two cents per share. The net cash profit for the quarter was $18.7m. This is a significant improvement on last year’s corresponding quarter when a net loss of $21.5m was recorded, due largely to the impact of significant negative sales adjustments caused by falling prices. PGM basket prices in US dollars strengthened across all operations, with the average group basket price 6% higher than the previous quarter at $931 per ounce. Strong jewellery demand in China and continued activity in PGM Exchange Traded Funds (ETF) mitigated the fall off in interest from the auto industry. The group expects the continuing strength of the rand and rising input costs, most notably of electricity, will continue to place pressure on margins in the South African platinum industry.
Reduction in debt and capital restructuring
Aquarius has responded decisively in turbulent markets and delivered an aggregate 13% production improvement across all its current operations. Consequently, it has managed to reduce the half year net loss of $70m announced in February 2009 to $45m by year-end. Aquarius remains cash positive with a strong balance sheet and $195m in cash. To restructure its capital base the company raised $270m which came from a $118.5m equity placement, a $73.5m rights issue and a convertible bond issue worth £78m.
Technical outlook
On the daily chart, Aquarius is near to breakout from a channel between 244.0p and 316.0p, with a higher low indicating strong uptrend. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) has crossed above 26 day EMA, indicating upside trend. 14 day RSI (relative strength index) is above 60 showing strength in trend. ADX (average directional index) is below 20 indicating consolidation, with 14 day positive DMI (directional moving index) above 14 day negative DMI indicating positive trend. Stock is also above 20 day and 50 day EMA which supports strength in trend. For a higher move stock has to go above 316.0p. The stock has resistance near 400.0p with support near 300.0p.
Trading strategy
The stock can be bought around 308.0p with a profit target 343.15p and stop loss of 292.5p (Hedge position: short position in spread betting with £4.09 bet per point).
| Sector |
Technology hardware & equipment |
Last closing price
(16/11/2009) (p) |
237.9 |
| 52 week High/Low (p) |
250/30 |
| Market Cap (£mn) |
548.68 |
Sector weight age by
Market Cap (%) |
9.26 |
| Average Volume (k) |
441.58 |
| P/E ratio (TTM) |
68.66 |
Industry P/E
ration (TTM) |
23.46 |
TTM: Trailing Twelve Month
Daily chart (IMG.L)
Business background and investment rationale
Imagination Technologies Group PLC is principally engaged in the design, development and marketing of multimedia technology. It also makes products that incorporate this technology.
Strong outlook for 2010
Imagination predicts double-digit revenue growth in 2010 as it expects strong revenue growth both from production and royalties for the year. This follows the continued bolstering in volume of existing products, as well as the launch of an increasing number of new end-user offerings which incorporate Imagination Intellectual Property (IP). Imagination remains on track to achieve its target of approximately 200 million units in the 2010/11 financial year. The business also expects to see a progressive increase in the number of licensee products incorporating latest generation graphics technology, POWERVR SGX, as well as a growing proportion of devices with multiple Imagination IP cores. The group anticipates an increase in shipments to new markets including TV/Set-Top-Box and Mobile Internet Devices, such as Net books.
PURE well positioned for Christmas
PURE is well positioned for Christmas following the launch a range of new products including: Luxurious EVOKE Mio range of leather and suede effect radios; and AVANTI Flow, a high quality next-generation digital audio system with iPod connectivity. In May 2009, PURE launched Sirocco 150 which works with iPhone - a fully featured DAB (Digital Audio Broadcasting)/ FM digital sound system with compact disc, Synchronous Dynamic Random access memory, universal serial bus (USB) and iPod dock. In September 2009 PURE launched Sensia which, in addition to DAB, offers an advanced intuitive touch screen user interface, internet connectivity and new capabilities such as social networking applications, Photoframe functionality and on-line information services.
Technical outlook
On the daily chart, Imagination has completed a ‘V’ pattern between 200.0p and 230.0p and is near to break-out above this level. It is also trading above the trendline joining the November 2008 low, which indicates the long-term positive trend is intact. Momentum oscillator MACD is positive and 12 day EMA has cross above 26 day EMA indicating strength in trend. RSI is above 60 indicating strong positive trend. 14 day positive DMI is above 14 day negative DMI and ADX is above 30 indicating strong uptrend. Stock has immediate resistance near 250.0p, with support near 200.0p.
Trading strategy
Stock can be bought near 233.0p with a profit target of 259.86p and stop loss of 221.31p (Hedge position: short position in spread betting with £5.36 bet per point).
GlaxoSmithKline PLC
On the daily chart, GlaxoSmithKline hit the reduced profit target of 1270.0p and is consolidating at 1250.0p. Stock has crossed above 20 day and 50 day EMA which indicates it will rise further. MACD is positive and 12 day EMA above 26 day EMA indicating a positive trend for the stock.14 day RSI is above 50 indicating strength in trend.14 day positive DMI is above 14 day negative DMI and ADX is near 20 indicating a consolidation. All positions should be closed for the stock.
Autonomy Corporation PLC
Autonomy has moved in a positive trend after last week’s consolidation above 1400.0p. Momentum oscillator MACD is negative and 12 day EMA has crossed above 26 day EMA indicating a positive trend.14 day RSI is above 50 indicating some strength in a positive direction. Looking at the positive trend, stock should be a hold with a new reduced profit target of 1410.0p and new stop loss of 1493.0p.
Babcock International Group PLC
On the daily chart, Babcock is still above a channel between 560.0p and 600.0p, making a new 52 week high of 660.5p last week. Stock rebounded from this high while MACD is still positive and 12 day EMA has crossed below 26 day EMA indicating a negative trend is forming. 14 day RSI is above 50 indicating strength in trend. Positive DMI is above negative DMI, which indicates a positive trend and ADX is near 22 indicating consolidation above 600.0p. Looking at the recent slump in prices, stock should be a hold with a reduced profit target of 650.0p.
Aveva group PLC
On the daily chart, Aveva hit the profit target of 1003.77p making a complete ‘V’ pattern between 865.0p and 1000.0p. MACD is positive, and 12 day EMA is above 26 day EMA, indicating a positive trend. 14 day RSI is above 60 indicating strength in trend. Stock is also above 20 day and 50 day EMA which is quite encouraging. All positions should be closed for the stock.
Serco Group PLC
On the daily chart, Serco has completed the ‘V’ pattern and is consolidating at the top of the pattern which indicates the stock will rise further if it breaks above 535.0p. MACD is positive and 12 day EMA has just crossed below 26 day EMA, indicating some consolidation. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative DMI which indicates uptrend is intact. Stock is also above 20 day and 50 day EMA which is quite encouraging. Serco should be a hold with the same profit target.
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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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