| Sector |
Oil equipment services and distribution |
Last closing price
(29/03/2010) (p) |
369.0 |
| 52 week High/Low (p) |
391.5/215.75 |
| Market Cap (£bn) |
1.96 |
Sector weight age by
Market Cap (%) |
16.53 |
| Average Volume (mn) |
1.54 |
| P/E ratio (TTM) |
17.7 |
Sector P/E
ration (TTM) |
67.9 |
TTM: Trailing Twelve Month
Daily chart (WG.L)
Business background and investment rationale
John Wood Group PLC is an energy services company operating in 46 countries, split across three business divisions: Engineering & Production Facilities, Well Support and Gas Turbine Services. The company provides a range of engineering, production support, maintenance management, industrial gas turbine overhaul and repair services to the oil & gas and power generation industries worldwide.
Resilient performance in Engineering & Production Facilities
In the full year result for 2009 announced on 02nd March 2010, the Group performed in line with expectations for the year thanks to a continued focus on production support, longer term capital projects, wide international exposure and a high quality customer base. The group generated a $546m cash flow from operations, representing a 54% increase on 2008. The company also declared a second interim dividend of 6.9 cents, making a full year dividend of 10 cents, up by 11% on last year. The performance in Engineering & Production Facilities was driven by increased activity across all engineering sectors and continued strong demand for production facilities in the North Sea and international markets. Recently the group won a three year contract worth $25m from BP to provide engineering, modifications and maintenance to its Sullom Voe Terminal. Last month John Wood Group was awarded a long-term service and maintenance program to maximise machine availability of the gas turbines, compressors and generators for Peru LNG at its Pampa Melchorita site south of Lima. The deal is worth $150m over an 18-year term.
Growth through acquisition
John Wood Group made three acquisitions to increase its presence in the Middle East, Africa and Asia-Pacific. The acquisition of Baker Energy Production Facilities established a market leadership position in the US Gulf of Mexico, expanding the group’s deepwater presence. It has also significantly enhanced the Group’s capability and market position in Australia and Africa, which has resulted in an important contract win with Statoil in Brazil. In Power Solutions, the Group strengthened its Eastern hemisphere execution capability with the acquisition of Shanahan Engineering, a company providing power plant installation with commissioning and maintenance services to the power and industrial sectors. To further strengthen its proposition in the Middle East, John Wood Group acquired Al-Hejailan Consulting, a Saudi Arabian engineering company, which has delivered an engineering and project management service presence in the oil, gas, chemical and power industries in the region.
Technical outlook
On the daily chart, stock is trading above positive trend line, joining last year March low of 193.7p. Recently stock has made a 52 week high of 391.5p and is consolidating between 362.0p and 391.5p. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) is below 26 day EMA indicating retracement in prices. RSI (relative strength index) is above 50 indicating strength in trend. 14 day negative DMI (directional moving index) is above 14 day positive DMI, while ADX (average directional index) is near 15 indicating a consolidation. Stock has resistance at 400.0p, and support near 350.0p. Stock is above 50 day and 200 day EMA indicating long term uptrend for the stock.
Trading strategy
Stock can be bought near 365.0p with a profit target of 407.0p and stop loss of 346.7p.
Stocks Update
Imperial Tobacco Group PLC
Imperial consolidated near its entry price last week and failed to make a new low indicating that it has stabilized at entry price. MACD is in negative territory, while 12 day EMA is below 26 day EMA indicating retracement in prices. 14 day RSI is below 50 showing weakness in trend. 14 day negative DMI is above 14 day positive DMI and ADX is near 15 indicating weakness in the positive trend. Looking at the negative trend forming in the stock it should be a hold with a new reduced profit target of 2100.0p.
Whitbread PLC
On the daily chart, Whitbread is in an uptrend and trading near its 52 week high of 1560.0p. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend for the stock. 14 day RSI has moved below 70 indicating some consolidation. Positive DMI is above negative DMI, while ADX is near 18 indicating steady movement. Stock is also trading above 20 day and 50 day EMA indicating an uptrend for the stock. Stock should be a hold with the same profit target.
Kazakhmys PLC
On the daily chart, Kazakhmys is in an uptrend after making a new 52 week high of 1574.0p. MACD is positive but 12 day EMA is just below 26 day EMA, indicating an uptrend is forming in the stock. 14 day RSI is above 60 indicating strength in trend. Positive DMI is above negative DMI, while ADX is near 18 indicating an uptrend is forming. Stock is above 20 day and above 50 day EMA indicating positive trend. Stock should be a hold with new profit target of 1673.0p.
Centrica PLC
Last week Centrica stayed above the ‘V’ Pattern between 263.0p and 288.0p indicating positive trend is intact in the stock. MACD is positive and 12 day EMA is just below 26 day EMA, which indicates a retracement from its 52 week high of 300.0p. 14 day RSI is near 60 indicating strength in the positive trend. Positive DMI is above negative DMI, while ADX is near 28 indicating an uptrend in stock prices. The stock is also above 20 day and 50 day EMA indicating a bullish signal for the stock. Stock should be a hold with the same profit target.
Admiral Group PLC
On the daily chart, Admiral made a new 52 week high of 1336.0p indicating positive trend for the stock. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA positive trend for the stock. RSI is also above 70 indicating an uptrend which is supported with a positive trend in both the indicators. 14 day positive DMI is above 14 day negative DMI, while ADX is near 40 indicating a strong uptrend in price. Stock should be a hold with the same profit target.
Hikma Pharmaceuticals PLC
On the daily chart Hikma made a new 52 week high of 639.5p indicating strong uptrend for the stock. The positive trend is intact for the stock supported by trading above 20 day EMA and 50 day EMA. MACD is positive and 12 day EMA is just above 26 day EMA, which indicates a positive trend. 14 day RSI is above 60.0p indicating strength in trend. Positive DMI is above negative DMI, while ADX is near 37 indicating a strong uptrend. Stock should be a hold with the same profit target.
GKN PLC
On the daily chart, GKN has broken out from the channel between 100.0p and 126.0p making a new 52 week high of 142.1p indicating a positive trend for the stock. MACD is positive and 12 day EMA is above 26 day EMA, indicating a positive trend. 14 day RSI is above 70 indicating uptrend in the stock. Positive DMI is above negative DMI, while ADX is near 44 indicating strong uptrend. Stock is above 20 day EMA and 50 day EMA supporting a positive trend for the stock. 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.
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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 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.
