| Sector |
Software & Computer services |
Last closing price
(01/03/2010) (p) |
1049 |
| 52 week High/Low (p) |
1112/463.5 |
| Market Cap (£mn) |
699.52 |
Sector weight age by
Market Cap (%) |
3.36 |
| Average Volume (k) |
211.6 |
| P/E ratio (TTM) |
18.89 |
Sector P/E
ration (TTM) |
8.77 |
TTM: Trailing Twelve Month
Daily chart (AVV.L)
Business background and investment rationale
Aveva Group PLC develops computer software for the engineering sector including the plant, power and marine industries.
Strong result
In an interim result announced in November 2009, Aveva’s short-term trading was impacted by the global economic uncertainty, particularly in the marine market. Total revenue decreased by 7% to £69.9m compared to £74.8m delivered in 2008. Recurring revenue amounted to £48.1m compared to £40.9m in 2008; accounting for 69% of total revenue and representing an increase of 18%. Recurring revenue accounted for 55% of 2008’s total revenue. A research and development investment of £10.3m to enhance and develop products to support future revenue growth did not impact on strong operating margins which were at 33%. Aveva continues to generate cash, and between 31 March and 30 September 2009 net cash increased by £7.7m to reach £133.9m. The company expects the oil & gas markets to remain relatively robust, particularly in developing countries such as Brazil where large complex projects are stimulating demand, delivering new customer wins and generating growth in the existing customer base. The group also benefitted from exchange rate movements in the first half of the year which delivered approximately £5m.
Completion of restructuring program
In July 2009 Aveva completed its restructuring program which combined its Central, Eastern, Southern and Western Europe sales region with the Middle East and Africa to form one EMEA region. The program cost £1.8m and created annualised savings of £5m. The firm also reduced headcount across the business by approximately 10%. The group continues to invest in improving sales and support, focusing on Aveva NET and other identified opportunities in growth markets like South America and the Commonwealth of Independent States.
Technical outlook
On the daily chart, Aveva is rebounding again from its low of 1000.0p towards its 52-week high of 1112.0p indicating formation of an upward trend for the stock supported by trading above 20 day and 50 day EMA (exponential moving average). MACD (moving average convergence/divergence) is negative but 12 day EMA has crossed above 26 day EMA, indicating an uptrend in the stock. 14 day RSI (relative strength index) is above 50, supporting strength in trend. 14 day positive DMI (directional moving index) is above 14 day negative DMI which indicates stock is in uptrend. Stock has resistance at 1112.0p and support at 1000.0p level.
Trading strategy
The stock can be bought around 1030.0p with a profit target 1149.0p and stop loss of 978.36p
| Sector |
Travel & Leisure |
Last closing price
(01/03/2010) (p) |
1455 |
| 52 week High/Low (p) |
1457/686.5 |
| Market Cap (£bn) |
2.49 |
Sector weight age by
Market Cap (%) |
4.51 |
| Average Volume (k) |
643.5 |
| P/E ratio (TTM) |
19.78 |
Sector P/E
ration (TTM) |
34.8 |
TTM: Trailing Twelve Month
Daily chart (WTB.L)
Business background and investment rationale
Whitbread PLC is a hotel and restaurant group managing several brands including; Premier Inn, Brewers Fayre, Table Table, Beefeater and Costa Coffee.
Expansion of Premier Inn and Costa Coffee
Premier Inn emerged as the UK’s largest and fastest growing hotel group after it opened 13 new hotels in 2009, incorporating 1,759 rooms plus five new pub restaurants on joint sites. In international expansion, Premier Inn opened its first hotel in Bangalore in India, while in 2009 Costa opened 154 stores in the UK and 22 internationally. Looking at the challenging macroeconomic conditions, Whitbread has decided to limit next year’s capital expenditure to around £170m for 2009/10 and intends to selectively deploy a limited amount of group property as an additional source of funding for expansion. Whitbread is on track to deliver the cumulative £25m in structural savings by the end of 2010/11 by outsourcing its logistics operation to Kuehne & Nagel.
Improvement in sales
For the 39 weeks to 26 November 2009, the Premier Inn budget hotel chain outperformed the wider hotel market, after the decline in like-for-like sales halved during the last three months. Regional revenue per available room (Revpar) at Premier Inn showed a reduction of 7.9% against the overall hotel market’s drop of 11.1%. The business account continues to attract customers with new users up 12% and many large national companies choosing to switch to Premier Inn driven by their search for value. Pub restaurants have achieved a robust performance with total full-year to date sales up by 6% and like-for-like sales up by 2% reflecting the strength of joint sites. Total sales achieved in Costa during the period are up 28.2%. Like-for-like sales are up 6.7% more than double the increase in the first half.
Technical outlook
On daily chart, Whitbread is trading at the top of the channel in a tight range of 1344.0p and 1457.0p. MACD is positive and 12 day EMA has crossed above 26 day EMA, indicating uptrend for the stock. 14 day RSI is also above 60 supporting upward movement. Positive DMI is above negative DMI, while ADX (average directional index) is near 13 indicating some consolidation. Stock is also trading above 20 day and 50 day EMA indicating uptrend for the stock. Stock has strong support near 1344.0p and resistance can found near 1600.0p.
Trading strategy
The stock can be bought around 1430.0p with a profit target 1489.4p and stop loss of 1360.6p.
Stocks Update
Wellstream Holdings PLC
On the daily chart, Wellstream hit reduced profit target of 495.0p as it is consolidating between 485.0p and 515.0p. MACD is still negative but 12 day EMA is slightly above 26 day EMA. 14 day RSI is above 50 indicating that it is forming a bottom near 500.0p. 14 day positive DMI is still below 14 day negative and ADX is below 20 indicating weakness in the uptrend. Stock is above 20 day EMA supporting the short-term uptrend. All position should be closed for the stock.
Chemring Group PLC
On the daily chart, Chemring continues in a positive trend after making a new 52 week high of 3365.0p. It is still above 20 day EMA and 50 day EMA which suggests the short-term uptrend is still intact. MACD is positive and 12 day EMA has cross above 26 day EMA, indicating an uptrend in the stock. 14 day RSI is above 60 showing strength in trend. 14 day positive DMI is above 14 day negative, while ADX is near 29 indicating an uptrend. Stock should be a hold with the same profit target.
Imperial Tobacco Group PLC
Imperial is continuously in an uptrend with a new 52 week high of 2110.0p indicating it will break-out from a small channel of 1990.0p and 2090.0p. Trend for the stock looks positive as MACD is positive and 12 day EMA is just above 26 day EMA, which indicates 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 27 indicating an uptrend in the stock. Stock should be a hold with the same profit target.
Fidessa group PLC
On the daily chart, Fidessa has made a new 52 week high of 1410.0p last week and still trading in that range from last three days indicate a clear breakout from its range between 1058.0p and 1300.0p indicating an uptrend for the stock. MACD is positive and 12 day EMA is above 26 day EMA indicating an uptrend in the stock. 14 day RSI is above 70 and both the indicators are making an uptrend. 14 day positive DMI is above 14 day negative and ADX is above 35 indicating a strong uptrend. Stock should be a hold with the same profit target.
Compass group PLC
On the daily chart, Compass has clearly broken above 470.1p hitting its profit target of 499.65p indicates an uptrend in the stock. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend. 14 day RSI is above 70 showing strength in trend. ADX is near 30 and positive 14 day DMI is above negative 14 day DMI showing a strong uptrend in the stock. Stock is above 20 day and 50 day EMA, and is still above 200 day EMA which indicates the short and long-term uptrend is intact for the stock. All position should be closed for the stock.
ENRC PLC
On the daily chart, ENRC hit the stop loss in a choppy market last week. Stock is still trading above the recommended price of 1045.0p and has broken upside from a channel between 850.0p and 1050.0p with higher lows. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating an uptrend. RSI is above 60 indicating a positive trend. 14 day positive DMI is above 14 day negative DMI indicating a strong uptrend. All position should be closed for the stock.
Party Gaming PLC
On the daily chart, PartyGaming has broken out from a channel of 234.0p and 300.0p making a new high of 306.0p last week indicating a positive trend for the stock. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating a strong positive trend in the stock. RSI is above 60 indicating a positive trend. 14 day positive DMI is above 14 day negative DMI supporting the uptrend, while ADX is at 36 indicating a strong uptrend. Stock 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 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.
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.
