| Sector |
General retailers |
Last closing price
(23/11/2009) (p) |
154.8 |
| 52 week High/Low (p) |
161.4/60.75 |
| Market Cap (£mn) |
806.51 |
Sector weight age by
Market Cap (%) |
2.33 |
| Average Volume (mn) |
3.25 |
| P/E ratio (TTM) |
– |
Industry P/E
ration (TTM) |
0.57 |
TTM: Trailing Twelve Month
Daily chart (KESA.L)
Business background and investment rationale
Kesa Electricals PLC is a holding company with independent subsidiaries operating across 690 stores in nine European countries. The company’s principal activity is the retail of electrical goods and furniture, with outlets including Comet and Darty.
Fewer declines in sales
In an interim management statement announced in September 2009, total group revenue increased by 5.8% in sterling and declined 0.2% in local currency; a fall of 3.9% on a like-for-like basis for the three months to 31 July 2009. Kesa’s web generated sales increased by 28% and the company also opened two new stores in Italy and one in Turkey. In France trading conditions remained challenging and caused Darty’s revenue to fall by 0.3% in local currency. Excluding Darty Box, revenue was down 1.5% and 3.7% on a like-for-like basis. Gross margins remained stable during the period, one new store and five additional kitchen outlets were opened.
Restructuring business
Given the weak trading conditions, Comet in the UK has taken action to improve its operational efficiency. This includes 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 endured extremely difficult market conditions in Spain, but the like-for-like sales decline has begun to ease and the restructuring programme is well advanced, including the closure of 10 stores during the period. These actions are expected to generate annualised cost savings of approximately €11m and contribute to a reduction in the retail losses for the coming financial year. In July 2009 Kesa sold Darty Switzerland to Swiss electrical retailing chain FUST for CHF 20m (£11.4m).
Technical outlook
On the daily chart, stock is consolidating above the key support level of 150.0p and trading near the 52 week low of 161.4p. This is after making a complete ‘V’ pattern between 128.0p and 161.0p and indicates another phase of leg up for the stock. MACD (moving average convergence/ divergence) is positive and 12 day EMA (exponential moving average) is above 26 day EMA, indicating uptrend. 14 day RSI (relative strength index) is also above 60 indicating strength in trend, but stock has to stay above 150.0p for a clear upside trend. Positive DMI (directional moving index) is above negative DMI, which indicates a positive trend. Stock has support at 150.0p and resistance at 173.0p.
Trading strategy
The stock can be bought around 151p with a profit target 168.41p and stop loss of 143.4p (Hedge position: Short position in spread betting with £ 8.27bet per point).
| Sector |
Mining |
Last closing price
(23/11/2009) (p) |
916.5 |
| 52 week High/Low (p) |
947/320.25 |
| Market Cap (£bn) |
8.88 |
Sector weight age by
Market Cap (%) |
3.94 |
| Average Volume (mn) |
2.67 |
| P/E ratio (TTM) |
12.76 |
Industry P/E
ration (TTM) |
16.06 |
TTM: Trailing Twelve Month
Daily chart (ANTO.L)
Business background and investment rationale
Antofagasta PLC is a Chile-based company whose principal activities are copper mining including exploration and development. It also has interests in water distribution and the transportation of freight by rail and road.
Increase in production
In a production report announced on 3 November 2009, Antofagasta’s copper production increased by 3.4% from 106,300 tonnes in the second quarter to 109,900 tonnes in the third quarter, mainly due to higher production at El Tesoro. Cumulative production in the first nine months of the year was slightly ahead of budget at 328,100 tonnes. The group’s cash costs in the third quarter were 81.7 cents per pound; 15.8 cents per pound below the second quarter this year and lower than budget. The decrease in cash costs were a result of higher molybdenum market prices, lower energy and acid costs, the weaker Chilean peso, and the impact of the cost reduction program implemented from the start of 2009.
Expansion in production and exploration
Antofagasta is expanding at Los Pelambres, which is on course for completion by the end of 2009, and the Esperanza project which will commence production in late 2010. In exploration activity Antofagasta entered exploration agreements in Chile, Zambia and Mexico as well as it’s Reko Diq joint venture in Pakistan which is undergoing a feasibility study. In October 2009 the group acquired 18% of the issued share capital of Sunridge Gold Corporation under a private placement of US$5m. This agreement sees Antofagasta take up to 60% interest in Sunridge's Asmara project in Eritrea by funding US$10m for exploration work over a five-year period, and a further 15% interest (for an aggregate 75% interest in the project) by delivering a feasibility study on the project.
Technical outlook
On the daily chart, Antofagasta is on the verge of completing a ‘V’ pattern between 879.0p and 956.0p making a strong positive trend, and it has not fallen below 20 day EMA in the last small correction of market which is quite encouraging. MACD is positive and 12 day EMA is above 26 day EMA indicating a positive trend. 14 day RSI is near 60 indicating strength in trend and the potential to move upside. Positive DMI is above negative DMI, which indicates a positive trend, and ADX is near 23 indicating a positive trend is forming. Stock has support at 860.0p and resistance at 950.0p.
Trading strategy
The stock can be bought around 900.0p with a profit target 1003.7p and stop loss of 854.8p (Hedge position: short position in spread betting with £1.38 bet per point).
Autonomy Corporation PLC
Autonomy stayed in a positive trend as it consolidated around 1450.0p. Momentum oscillator MACD is negative and 12 day EMA is still 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 reduced profit target of 1410.0p and stop loss of 1493.0p.
Babcock International Group PLC
On the daily chart, Babcock is consolidating between 620.0p and 630.0p, after rebounding from a 52 week high of 660.5p. 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 20 indicating consolidation. Looking at the lack of movement, stock should be a hold with a reduced profit target of 650.0p.
Serco Group PLC
On the daily chart, Serco is forming a negative trend after it fell below 520.0p. MACD is still positive and 12 day EMA has just crossed below 26 day EMA, indicating some consolidation. 14 day RSI is also below 50 showing a weakness in trend. 14 day positive DMI is above 14 day negative DMI and ADX is near 20 indicating consolidation. Looking at the lack of movement, stock should be a hold with a reduced profit target of 545.0p.
Aquarius Platinum Ltd.
On the daily chart, Aquarius hit the profit target of 343.15p after breaking out from a channel between 244.0p and 316.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating a positive trend. 14 day RSI is above 70 indicating overbought. Stock is also above 20 day and 50 day EMA which is quite encouraging. All positions should be closed for the stock.
Imagination Technologies Group PLC
On the daily chart, Imagination hit the stop loss of 221.31p after completing a ‘V’ pattern between 200.0p and 230.0p. Momentum oscillator MACD is positive but 12 day EMA has crossed below 26 day EMA indicating some weakness. RSI is still above 50 indicating the positive trend is intact. 14 day positive DMI is above 14 day negative DMI and ADX is above 30 indicating an uptrend. All positions 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.
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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.
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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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