| Sector |
Mining |
Last closing price
(06/04/2010) (p) |
2997 |
| 52 week High/Low (p) |
3015.5/1099 |
| Market Cap (£bn) |
38.76 |
Sector weight age by
Market Cap (%) |
14.2 |
| Average Volume (mn) |
4.65 |
| P/E ratio (TTM) |
22.9 |
Sector P/E
ration (TTM) |
2.73 |
TTM: Trailing Twelve Month
Daily chart (AAL.L)
Business background and investment rationale
Anglo American PLC is a global mining company. Its portfolio of mining assets and natural resources includes platinum group metals and diamonds, with interests in copper, iron ore, metallurgical coal, nickel and thermal coal. The company also has a divestment portfolio of other mining and industrial businesses and operates in Africa, Europe, South and North America, Australia and Asia.
Improvement in operational efficiencies
In the preliminary 2009 full year results announced in February 2010, Anglo American’s underlying earnings were $2.6bn, a drop from $5.2bn in 2008, while operating profits fell from £10.1bn to $5bn over the course of the year. In the wake of lower earnings and profits, the group is leveraging its global scale to deliver cost savings of $2bn across the supply chain by 2011. The company plans to form strategic global partnerships with key suppliers and plans to consolidate the number of different suppliers for any given product or service. In 2009 asset optimisation and global supply chain and shared services programmes delivered $1.6bn in savings, with $1.4bn from core operations, which was ahead of expectations.
Investment in selected commodities
Anglo American is deploying its capital in commodities that deliver long-term growth, have strong fundamentals and offer the most attractive risk-return profiles. These include copper, diamonds, iron ore, manganese, metallurgical coal, nickel, platinum and thermal coal. The group’s $17bn pipeline of approved projects spans the core commodities and is expected to deliver organic production growth of more than one third by 2013. Anglo American’s Los Bronces copper expansion project is on schedule, with first production coming in the fourth quarter of 2011. Output is expected to increase from the fourth quarter of 2012 to reach an average of 490 kilo-tonnes per annum (ktpa) over the first three years of full production. Kumba Iron Ore’s Kolomela project, previously known as the Sishen South project, is on track and progressing well towards first production in the first half of 2012. When full production is achieved in 2013, output will hit nine million-tonnes per annum (mtpa) of high quality iron ore, with further potential for expansion.
Technical analysis
On the daily chart Anglo American completed a ‘V’ Pattern between 2231.0p and 2955.0p making a new 52 week high of 3015.0p, which indicates a positive trend is forming in the stock. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) is above 26 day EMA, also indicating a positive trend for the stock. 14 day RSI (relative strength index) is above 70, again indicating a positive trend supported by a positive slope in MACD and RSI. Positive DMI (directional moving index) is above negative DMI, while ADX (average directional index) is near 27 indicating a strong uptrend in stock prices. The stock is also above 20 day and 50 day EMA indicating a bullish signal for the stock. Stock has resistance near 3350.0p and support near 2500.0p.
Trading strategy
The stock can be bought around 2960.0p with a profit target 3301.0p and stop loss of 2811.0p
| Sector |
Oil & Gas producers |
Last closing price
(06/04/2010) (p) |
105.8 |
| 52 week High/Low (p) |
111.0/32.25 |
| Market Cap (£mn) |
920.7 |
Sector weight age by
Market Cap (%) |
0.29 |
| Average Volume mn) |
14.5 |
| P/E ratio (TTM) |
– |
Sector P/E
ration (TTM) |
65.8 |
TTM: Trailing Twelve Month
Daily chart (AFR.L)
Business background and investment rationale
Afren PLC is an independent oil and gas exploration, development and production company. It has an attractive, diversified and balanced portfolio of African assets with a focus on the Gulf of Guinea region.
Strong outlook for 2010
In the full year result for 2009 announced on 29 March 2010, Afren reported a profit of $0.5m, it’s first since inception and compares favourably with a pre-tax loss of $55.6m in 2008. Production at Okoro was ahead of pre-production expectations, leading to an average gross production rate for the field of 18,800 barrels of oil per day (bopd). Production from CI-11 in Cote d'Ivoire was stable, with average gross rates of 30 million standard cubic feet per day (mmscfd) and 1,230 bopd. In 2010 Afren will drill two infill wells in Okoro targeting identified zones to restore gross field production rates to more than 21,000 bopd from the current output of 18,800 bopd. In 2009, Afren recorded a 100% appraisal success rate at the Ebok project and the first oil is expected from the field in October 2010 at an initial rate of 15,000 bopd, with production rates expected to hit 35,000 bopd in 2010. In March 2010 (post period end), the company signed a facility agreement allowing them to borrow up to $450m, secured against reserves in the Ebok project to fund development activities across the broader Ebok/Okwok/OML 115 area.
Increase in reserve estimate
Netherland, Sewell & Associates Inc (NSAI), an independent assessment agency, has significantly increased Afren’s proved plus probable (2P) reserves to support management estimates.
These are as follows:
- Ebok: gross 2P at 31 December 2009 was 107.5 million barrels (mmbbls) vs 19.1 mmbbls as at 30 June 2009.
- Okoro: gross 2P at 31 December 2009 was 24.8 mmbbls vs 15.5 mmbbls at 30 June 2009.
- OPL 310 prospectivity was upgraded to 521 million barrels of oil equivalent (mmboe) from 329 mmboe.
Technical outlook
On the daily chart, stock is continuously in an uptrend after making higher lows and is consolidating near its 52 week high of 111.0p. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating uptrend. RSI is above 60 indicating 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 30 indicating strong uptrend in prices. Stock has immediate resistance at 111.0p, and support near 100.0p.
Trading strategy
Stock can be bought near 104.0p with a profit target of 116.0p and stop loss of 98.72p
Stocks Update
Imperial Tobacco Group PLC
Imperial has slipped below 2000.0p clearly indicating weakness in stock prices. MACD is in negative territory, while 12 day EMA is below 26 day EMA indicating weakness in prices. 14 day RSI is near its oversold zone of 30 showing weakness in trend. 14 day negative DMI is above 14 day positive DMI and ADX is near 18 indicating negative trend. Looking at the negative trend forming in the stock it should be a hold with a new reduced profit target of 2020.0p.
Whitbread PLC
On the daily chart, Whitbread retraced from its 52 week high of 1560.0p. MACD is positive and 12 day EMA is below 26 day EMA, indicating weakness in uptrend for the stock. 14 day RSI is above 50 indicating strength in stock. Negative DMI is above positive DMI, while ADX is near 15 indicating weakness in uptrend. Stock is trading above 50 day and 200 day EMA indicating medium term uptrend for the stock. Stock should be a hold with reduced profit target of 1550.0p.
Kazakhmys PLC
On the daily chart, Kazakhmys is in an uptrend after making a new 52 week high of 1634.0p. 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 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 same profit target of 1673.0p.
Centrica PLC
Last week Centrica moved in a positive direction near to its 52 week high of 300.0p indicating positive trend for the stock. MACD is positive and 12 day EMA is just below 26 day EMA, which indicates consolidation. 14 day RSI is above 60 indicating strength in the positive trend. Positive DMI is above negative DMI, while ADX is near 27 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 hit profit target of 1372.0p making a new 52 week high of 1403.0p 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 47 indicating a strong uptrend in price. All positions should be closed for the stock.
Hikma Pharmaceuticals PLC
On the daily chart Hikma hit the profit target of 658.1p and made a new 52 week high of 667.5p indicating a 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 70.0p indicating strength in trend. Positive DMI is above negative DMI, while ADX is near 47 indicating a strong uptrend. All positions should be closed for the stock.
GKN PLC
On the daily chart, GKN hit the profit target of 142.8p after it broke out from the channel between 100.0p and 126.0p 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 49 indicating strong uptrend. Stock is above 20 day EMA and 50 day EMA supporting a positive trend for the stock. All positions should be closed for the stock.
John Wood Group PLC
On the daily chart, stock is trading again near its 52 week high of 391.5p indicating positive trend for the stock. MACD is positive and 12 day EMA is just below 26 day EMA indicating a rebound in prices. RSI is above 60 indicating strength in trend. 14 day positive DMI is above 14 day negative DMI, while ADX is near 15 indicating a positive trend is forming. Stock has resistance at 400.0p, and support near 350.0p. Stock is above 20 day and 50 day EMA indicating uptrend for the stock. 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.
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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 January to 31st March 2010:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
96% |
24 |
| Hold |
0 |
0 |
| Sell |
4% |
1 |
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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