| Sector |
Support services |
Last closing price
(14/12/2009) (p) |
810 |
| 52 week High/Low (p) |
819/342 |
| Market Cap (£bn) |
2.19 |
Sector weight age by
Market Cap (%) |
3.6 |
| Average Volume (k) |
953.02 |
| P/E ratio (TTM) |
14.51 |
Industry P/E
ration (TTM) |
3.98 |
TTM: Trailing Twelve Month
Daily chart (AGK.L)
Business background and investment rationale
Aggreko PLC provides electrical power and temperature control to customers who need them quickly, or for a short or indeterminate length of time. The company operates globally with 133 service centres and offices in 31 countries.
Strong first half result
In an interim result announced in August for the first half 2009, Aggreko reported a strong start to the year. Total revenues in the six months to 30 June 2009 grew by 23%, which on a constant currency basis excluding pass-through fuel amounted to 14% growth. Local business revenues on a constant currency basis decreased by 13% while trading profit fell by 29%, reflecting challenging market conditions. However, the International Power Projects business grew by 40% following a string of new projects. The division was awarded projects including an additional 140MW (Megawatts) in Kenya 100MW in Saudi Arabia, 30MW in Ethiopia and 20MW in Guadeloupe. Revenue from gas-powered units grew 126% and Aggreko now has 150MW of gas-powered capacity contracted to customers.
Debt reduction and strong outlook for 2009
In the first six months to 30 June 2009, net debt decreased by £76.8m to £287.2m. The company had bank facilities totalling £536.2m at 30 June 2009, with the next significant maturity not due until 2011, leaving them ample headroom to finance the needs of the business. The group expects to deliver a strong full year result for 2009 despite tougher conditions in the local businesses, and will benefit from the strengthening of dollar against sterling from 2008, because 70% of the group’s earnings are in the US currency.
Technical Outlook
On the daily chart Aggreko has broken out from a channel between 730.0p and 800.0p completing a ‘W’ pattern. Stock is also trading above the positive trendline indicating a bullish trend. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) is above 26 day EMA indicating positive trend. Stock prices are also trading below 20 and 50 day EMA confirming the uptrend is intact. RSI (relative strength index) is above 60 indicating strength in trend. Positive DMI (directional moving index) is above negative DMI indicating positive trend. For a higher move the stock has to consolidate around 800.0p.
Trading Strategy
Stock can be bought around 800p with a profit target of 892.24p and stop loss of 759.89p. (Hedge position: Short in spread betting with £1.56 bet per point).
| Sector |
Technology hardware & equipment |
Last closing price
(14/12/2009) (p) |
169.5 |
| 52 week High/Low (p) |
179/75.75 |
| Market Cap (£bn) |
2.16 |
Sector weight age by
Market Cap (%) |
38.19 |
| Average Volume (mn) |
5.15 |
| P/E ratio (TTM) |
48.48 |
Industry P/E
ration (TTM) |
6.23 |
TTM: Trailing Twelve Month
Daily chart (ARM.L)
Business background and investment rationale
ARM Holdings PLC designs: microprocessors, physical library solutions (physical IP), related technology and software and also sells development tools.
Growth in mobile & non-mobile applications
In a third quarter result announced in October 2009, ARM technology-based chips continued to gain market share in both mobile and non-mobile applications. ARM signed a record 28 processor licenses during the quarter. Four of these licenses were for processors still under development and all of the revenue associated with these agreements goes into backlog which will be recognised in future quarters as engineering milestones are achieved. The group’s backlog at the end of the quarter was up 3% sequentially and ARM continued to gain share in non-mobile end-markets. Shipments of ARM-based microcontrollers grew 75% sequentially, compared to 30% for the overall microcontroller market.
Upbeat outlook
ARM expects trading performance in the second half of 2009 to improve as demand for its latest technology remains robust. This positive outlook is driven by original equipment manufacturers - including Acer, Dell, HTC, Nokia and Sharp, planning to use Cortex(TM)-A processors for smartphones and mobile computing. In the second quarter, smartphone shipments grew about 25% year-on-year while overall mobile phone shipments declined about 5%. For the third quarter, ARM achieved an average of 2.1 ARM technology based chips per mobile handset, up from 2 in the previous quarter.
Technical Outlook
On the daily chart, ARM has more than doubled from 2008’s October low and is trading above the trendline joining the January 2009 low, which indicates the long-term positive trend is intact. It has also broken the channel between 150.0p and 170.0p, indicating a positive trend for the stock. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating strength in trend. RSI is near 70 indicating strong positive trend. 14 day positive DMI is above 14 day negative DMI indicating strong uptrend. Stock has to consolidate above 160.0p for an uptrend, with support near 150.0p.
Trading strategy
Stock can be bought near 166.0p with a profit target of 185.13p and stop loss of 157.67p (Hedge position: short position in spread betting with £7.52 bet per point).
Antofagasta PLC
On the daily chart, Antofagasta is in a consolidation phase between 900.0p and 950.0p, and has crossed above 20 day EMA which is quite encouraging. MACD is positive and 12 day EMA is still below 26 day EMA indicating consolidation. 14 day RSI is above 50 indicating strength in trend and the potential to move upside. Positive DMI is above negative DMI, which indicates a recent price increase. Stock should be a hold with a new profit target of 985.0p.
Imperial Tobacco Group PLC
Imperial has completed a ‘V’ pattern between 1756.0p and 1900.0p and is trading above 1900.0p 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 and the potential to move further upside. 14 day positive DMI is above 14 day negative DMI indicating uptrend. Stock should be a hold with the same profit target.
Wellstream Holdings PLC
On the daily chart, Wellstream hit a stop loss of 490.13p and is currently trading near the stop loss, indicating negative trend. MACD is negative and 12 day EMA has just crossed below 26 day EMA, indicating a negative trend is forming. 14 day RSI is below 50 showing weakness in trend. 14 day positive DMI is still below 14 day negative and ADX is near 20, indicating consolidation. All positions should be closed for the stock.
TUI Travel PLC
On the 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 is in positive trajectory with 12 day EMA above 26 day EMA indicating uptrend for the stock. RSI is above 60 indicating strength in trend; both indicators are making an upward trend with a positive slope. 14 day positive DMI is above negative DMI indicating uptrend. Stock should be a hold with the same profit target.
Fidessa Group PLC
On the daily chart, Fidessa consolidated around 1100.0p last week. MACD is negative but 12 day EMA crossed above 26 day EMA, indicating an uptrend is forming. 14 day RSI is below 50 but both the indicators are making an uptrend. 14 day negative DMI is above 14 day positive indicating consolidation. Stock has crossed above 20 day EMA and still above 200 day EMA which indicates the short term bullish trend. Stock should be a hold with the same profit target.
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.
