| Sector |
Software & Computer services |
Last closing price
(07/12/2009) (p) |
1116 |
| 52 week High/Low (p) |
1341/475 |
| Market Cap (£mn) |
395.72 |
Sector weight age by
Market Cap (%) |
1.91 |
| Average Volume (k) |
46.78 |
| P/E ratio (TTM) |
22.46 |
Industry P/E
ration (TTM) |
50.77 |
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%, climbing to £116m from £85m for the same period last year and constant currencies revenue grew by 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 after 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 every 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 trading in a channel between 1000.0p and 1217.0p with higher lows. It has stayed above 1000.0p for the last six months indicating a bottom has formed at this level. MACD (moving average convergence/divergence) is negative but 12 day EMA (exponential moving average) has crossed above 26 day EMA, indicating an uptrend is forming. 14 day RSI (relative strength index) is below 50 but both the indicators are making an uptrend. 14 day negative DMI (directional moving index) is above 14 day positive and ADX (average directional index) is near 20 indicating consolidation. Stock is below 20 day and 50 day EMA but above 200 day EMA which indicates the long-term uptrend is still intact. Stock has strong resistance near 1200.0p and support near 1000.0p.
Trading strategy
The stock can be bought around 1100.0p with a profit target 1226.83p and stop loss of 1045.0p (Hedge position: Short position in spread betting with £1.13 bet per point).
| Sector |
Travel & Leisure |
Last closing price
(07/12/2009) (p) |
250.5 |
| 52 week High/Low (p) |
294.75/194.9 |
| Market Cap (£bn) |
2.75 |
Sector weight age by
Market Cap (%) |
5.4 |
| Average Volume (mn) |
2.78 |
| P/E ratio (TTM) |
– |
Industry P/E
ration (TTM) |
6.04 |
TTM: Trailing Twelve Month
Daily chart (TT.L)
Business background and investment rationale
TUI Travel PLC is a UK-based international leisure travel group. In September 2007, First Choice Holidays PLC and the Tourism Division of TUI AG merged to form TUI Travel PLC. The company intends to operate in four sectors: mainstream, specialist holidays, activity holidays and online destination services.
Strong final year result
In the preliminary final year result ending September 2009, TUI has delivered a strong performance with underlying operating profits up 11%, reaching £443m compared with £398m in 2008. The underlying operating margin was 3.2% representing a rise of 30 basis points from the 2.9% reported in 2008. Underlying earnings per share increased by 17% to 23.8p. TUI is confident that for winter 2009/10 it will achieve the required load factors, having seen stronger bookings in recent weeks; a reflection of a similar pattern for winter 2008/09. The group’s summer 2010 UK trading remains encouraging, with a load factor in line with 2009 and average selling prices up by 7% year-on-year. Initial trading in the Nordic markets for summer 2010 has also been encouraging, with load factors flat at 15% and average selling prices up 3%.
Positive updates on Integration and fuel hedging
Integration of First Choice and TUI AG has been excellent and is on track to deliver a £200m synergy target by 2011. For 2009 the group has already delivered £120m and expects to generate a further £60m in 2010. The group is well hedged for all open seasons in each source market using a variety of instruments including options on top of forward contracts. The hedging has helped insulate the firm from high volatility in fuel and foreign exchange prices by providing certainty of cost and flexibility if there is an increase in fuel prices or a strengthening of sterling in the coming months.
Technical Outlook
On daily chart TUI is in a consolidation phase between 220.0p and 270.0p and is trading above on a positive slope joining November 2008’s low. Momentum oscillator MACD recently came in a positive trajectory with 12 day EMA above 26 day EMA. RSI is above 50 indicating strength in trend; both indicators are making an upward trend with a positive slope. 14 day positive DMI has crossed above negative DMI indicating that stock is forming an uptrend. On stochastic, fast stochastic crossed above slow stochastic which indicates a weak buy. Stock has resistance at 270.0p and support near 220.0p.
Trading strategy
Stock can be bought near 245.0p with a profit target of 273.24p and stop loss of 232.71p (Hedge position: short position in spread betting with £5.09 bet per point).
Babcock International Group PLC
On the daily chart, Babcock hit a reduced profit target of 535.0p after consolidation between 620.0p and 640.0p. MACD is still positive and 12 day EMA has crossed below 26 day EMA indicating some weakness and consolidation. 14 day RSI is above 50 indicating some strength in trend. Negative DMI is above positive DMI which indicates a negative trend, and ADX is near 20 indicating consolidation. All positions should be closed for the stock.
Serco Group PLC
On the daily chart, Serco hit a reduced profit target of 530.0p after it fell below 520.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating some consolidation. 14 day RSI is above 50 showing an uptrend is forming. 14 day positive DMI is above 14 day negative DMI and ADX is near 20 indicating consolidation. All positions should be closed for the stock.
Kesa Electricals PLC
On the daily chart, Kesa hit a reduced profit target of 156.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating uptrend. 14 day RSI is above 50 indicating strength in trend. Positive DMI is above negative DMI, which indicates a positive trend. All positions should be closed for the stock.
Antofagasta PLC
On the daily chart, Antofagasta is in a consolidation phase between 879.0p and 950.0p, and has crossed above 20 day EMA which is quite encouraging. MACD is positive and 12 day EMA has crossed below 26 day EMA indicating recent weakness in positive trend. 14 day RSI is above 50 indicating strength in trend and the potential to move upside. Negative DMI is above positive DMI, which indicates a recent fall. Stock should be a hold with a new profit target of 970.0p.
Imperial Tobacco Group PLC
Imperial has completed a ‘V’ pattern between 1756.0p and 1900.0p and is above 20 day EMA which is quite encouraging. The short-term trend for the stock looks positive as MACD is positive and 12 day EMA is above 26 day EMA, which indicate an uptrend. 14 day RSI is above 60 showing strength in trend. 14 day positive DMI is above 14 day negative DMI and ADX is near 20 indicating uptrend and consolidation. Stock should be a hold with the same profit target.
Wellstream Holdings PLC
On the daily chart, Wellstream is consolidating between 520.0p and 540.0p and is currently trading near entry price. MACD is negative but 12 day EMA is above 26 day EMA, indicating an uptrend is forming. 14 day RSI is near 50 showing strength in trend. 14 day positive DMI is still below 14 day negative and ADX is near 20, indicating consolidation. Looking at the lack of movement in the stock, it should be a hold with a reduced profit target of 550.0p.
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 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.
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.
