| Sector |
Mining |
Last closing price
(04/01/2010) (p) |
1379 |
| 52 week High/Low (p) |
1379/187.3 |
| Market Cap (£bn) |
7.1 |
Sector weight age by
Market Cap (%) |
3.01 |
| Average Volume (mn) |
1.36 |
| P/E ratio (TTM) |
13.96 |
Sector P/E
ration (TTM) |
8.36 |
TTM: Trailing Twelve Month
Daily chart (KAZ.L)
Business background and investment rationale
Kazakhmys PLC is an international natural resources company with it’s main operations in Kazakhstan and the surrounding countries of Central Asia. The company’s principal engagement is copper mining but it also has interests in zinc: silver, gold, power generation and petroleum.
Improvement in production
In the first nine months of 2009 Kazakhmys’ copper cathode equivalent production was in line with 2008’s output and is on track to meet the full year target of 315 Kilo tonnes (kt). Increased production at several mines, the use of stockpiled material, reductions of inventory, improvements in recovery rates and other efficiencies all contributed to the firm’s strong performance. In by-products zinc concentrate production for the first nine months of 2009 was 4% above the corresponding period in 2008, benefiting from the processing of previously stockpiled material. The processing of stockpiled ore from Abyz and Akbastau, mainly in the first half of the year, led to a 9% increase in silver production to 13,196 koz in the nine months to 30 September 2009.
Repayment of debt and loan facility
The group’s net debt position, which consists of cash, current deposits and borrowings, amounted to $1.398bn at 30 September 2009 compared to $1.568bn at 30 June 2009. Cash and deposits increased to $541m at 30 September 2009 from $491m at 30 June 2009. Cash generation benefited from strengthening commodity prices and higher power sales during the quarter which offset debt repayments on the group’s principal debt facility of $131m. Kazakhmys’ $150m standby revolving credit facility remained undrawn at 30 September 2009. In December 2009 Kazakhmys secured up to $2.7bn in loans from the China Development Bank Corporation for development of the Boschekul copper project.
Technical analysis
On the daily chart Kazakhmys is trading above the positive trendline. It has broken out from a range of 1000.0p and 1300.0p and is making a new 52 week high, indicating a positive trend is forming in the stock. MACD (moving average convergence/divergence) is positive and 12 day EMA (Exponential moving average) has crossed above 26 day EMA on the daily chart, which indicates a positive trend has formed. 14 day RSI (relative strength index) is above 60.0 indicating a positive trend and the potential to move further upside. Positive DMI (directional moving index) is above negative DMI, while ADX (average directional index) is near 26 indicating uptrend. Stock is also above 20 day and 50 day exponential moving average indicating a bullish signal for the stock. Stock has resistance near 1550.0p and support near 1000.0p.
Trading strategy
The stock can be bought around 1360.0p with a profit target 1516.8p and stop loss of 1291.8p
| Sector |
General retailers |
Last closing price
(04/01/2010) (p) |
108.0 |
| 52 week High/Low (p) |
223.5/103.0 |
| Market Cap (£mn) |
367.43 |
Sector weight age by
Market Cap (%) |
1.03 |
| Average Volume (mn) |
1.77 |
| P/E ratio (TTM) |
5.41 |
Sector P/E
ration (TTM) |
0.39 |
TTM: Trailing Twelve Month
Daily chart (GMG.L)
Business background and investment rationale
Game Group PLC operates retail outlets specialising in computer software, video games and related products.
Weak trading update
In a trading statement announced for the 18 weeks to 5 December 2009, total group sales were down by 11.3%, while group like for like (lfl) sales for the same period were down by 13.9%. In the UK and Ireland, total sales were down by 15.3% and lfl sales were down by 16.6%. In international business, total sales and lfl sales were down by 1% and 6.7%, respectively. Game faces tough competition from supermarkets coupled with a fall in overall hardware revenues, but it’s market share position has improved thanks to the strength of it’s consumer proposition, which includes trade-in offers, loyalty card discounts, breadth of range and specialist staff. Due to the ongoing strength in pre-owned sales and mint software offers, Game expects a 170 to 220 basis points increase in gross margin over the prior year. The synergies from the integration of Gamestation and strong cost disciplines will result in further savings. Game is also investing in online business where it has launched three new consumer websites in Europe taking the total to 10. It has also expanded its UK websites with additional products, enhanced functionality and improved customer services.
Strong demand in software sales
Third generation platforms have reached 27.2 million in the UK and Game anticipates that these successful hardware formats will continue to drive demand for software during 2010. Historically December and January represent around 25% of Game’s annual turnover, and the company will benefit from a number of major software releases including Call of Duty: Modern Warfare 2 (exclusively available with Game in the UK) and FIFA 10, which both broke records in their first week of launch. There are further strong software titles scheduled for release from January 2010, including Vancouver 2010 from Sega and Mass Effect 2 from Electronic Arts. Game has seen rewards from an expansion strategy which saw it open 43 stores in the 2009. The group now trades from over 1,406 outlets with nearly half of it’s portfolio within international operations.
Technical outlook
On the daily chart, Game is oversold after a weak trading updated on 8 December 2009 and is trading near a 52 week low of 103.0p. Consolidation around this price from the last six sessions indicates that a bottom has formed in the stock, supported by MACD which is negative. However 12 day EMA has crossed above 26 day EMA indicating formation of an uptrend. 14 day RSI is below 30 but rebounded from an oversold level, and 14 day negative DMI is above 14 day positive DMI indicating a negative trend. Stock has to hold 100.0p for a higher move. Stock has resistance near 135.0p and support near 93.0p.
Trading strategy
The stock can be bought around 106.0p with a profit target 118.22p and stop loss of 100.68p
Antofagasta PLC
Last week Antofagasta hit a reduced profit target of 960.0p and was trading above the original profit target of 1003.77p. MACD is positive and 12 day EMA is above 26 day EMA indicating a positive trend. 14 day RSI is above 70 indicating strength in trend and the potential to move upside. Positive DMI is above negative DMI, which indicates a positive trend with higher lows. All positions should be closed for the stock.
Imperial Tobacco Group PLC
Imperial has completed a ‘V’ pattern between 1756.0p and 1900.0p hitting a reduced profit target of 1924.0p, and last week it made a new 52 week high of 1988.0p. The 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. All positions should be closed for the stock.
TUI Travel PLC
On the daily chart, TUI hit reduced profit target of 260.0p. MACD is positive with 12 day EMA above 26 day EMA indicating an uptrend for the stock. RSI is above 50 indicating strength in trend. 14 day positive DMI is above negative DMI indicating uptrend. All position should be closed for the stock.
Fidessa Group PLC
Last week Fidessa broke above 1200.0p indicating a positive trend for the stock after consolidation above 1100.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend is forming. 14 day RSI is above 50 and both the indicators are showing an uptrend. 14 day positive DMI is above 14 day negative indicating uptrend. Stock has crossed above 20 day EMA and is still above 200 day EMA which indicates the short-term bullish trend. Stock should be a hold with a same profit target.
ARM Holding PLC
On the daily chart, ARM hit the reduced profit target of 177.0p and is trading near the original profit target of 185.13p which indicates 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 60 indicating a positive trend. 14 day positive DMI is above 14 day negative DMI indicating 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.
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 October to 31st December 2009:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
82% |
18 |
| Hold |
0 |
0 |
| Sell |
18% |
4 |
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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