Aquarius Platinum Limited
AQP.L
| Sector |
Mining |
Last closing price
(12/04/2010) (p) |
449.1 |
| 52 week High/Low (p) |
464.0/172.75 |
| Market Cap (£bn) |
3.5 |
Sector weight age by
Market Cap (%) |
0.77 |
| Average Volume (mn) |
1.78 |
| P/E ratio (TTM) |
29.79 |
Sector P/E
ration (TTM) |
2.71 |
TTM: Trailing Twelve Month
Daily chart (AQP.L)
Business background and investment rationale
Aquarius Platinum Limited is engaged in the exploration, development and acquisition of platinum group metals (PGM) including platinum, palladium, rhodium and gold. It has PGM mining and exploration operations in South Africa and Zimbabwe, with administration functions in Australia and Bermuda.
Improved pricing for PGM
In a first half result for 2009/10 announced in February, Aquarius’ attributable production was 208,857 PGM ounces; 7% higher than the previous six months to June 2009. Aquarius reported net profits of $3.9m following a $70.9m loss in 2008, which equated to 0.86 cents per share. In spite of lower production, revenues increased by 48% to $206.1m following higher PGM prices, allowing the group to declare interim dividends of 2.0 cents per share. PGM basket prices in US dollars strengthened across all operations reflecting an improving fundamental market demand, while significant interest in Exchange Traded Funds (ETF) continues to drive platinum and palladium prices. With prices rising across all PGM metals, palladium and rhodium recorded the largest price increases at 58% and 72% respectively. Average group basket prices were 25% higher than the previous six months at $1026 per ounce. The group expects the continuing strength of the rand and rising input costs, most notably of electricity, will place further pressure on margins in the South African platinum industry.
Strong outlook
The improvement in the dollar basket price during the first six months of the 2009/10 financial year enabled Aquarius to return to profitability. This was in spite of a strong rand and lower production caused principally by the unprotected industrial action at Kroondal and Marikana in the first quarter. Aquarius expects revenue per ounce for the second half to be better than the first half thanks to higher production from the Blue Ridge acquisition, the re-establishment project at Everest and the outcome of the Mimosa expansion. After successfully raising $300m of unsubordinated, unsecured convertible notes, Aquarius’ cash balances increased by $378m from the first half of 2008/09 to reach $465m.
Technical outlook
On the daily chart, Aquarius is near to breaking out from a ‘V’ pattern between 347.0p and 453.0p, with a higher low indicating a strong uptrend. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) is above 26 day EMA, indicating an upside trend. 14 day RSI (relative strength index) is above 60 showing strength in trend. ADX (average directional index) is near 20 indicating the formation of an uptrend, with 14 day positive DMI (directional moving index) above 14 day negative DMI indicating a positive trend. Stock is also above 20 day and 50 day EMA which supports strength in trend. For a higher move stock has to consolidate above 450.0p. The stock has resistance near 500.0p with support near 420.0p.
Trading strategy
The stock can be bought around 440.0p with a profit target 490.7p and stop loss of 417.9p
| Sector |
Household goods and home construction |
Last closing price
(12/04/2010) (p) |
782.0 |
| 52 week High/Low (p) |
927.5/591.5 |
| Market Cap (£mn) |
948.4 |
Sector weight age by
Market Cap (%) |
2.76 |
| Average Volume (k) |
446.9 |
| P/E ratio (TTM) |
43.22 |
Sector P/E
ration (TTM) |
36.3 |
TTM: Trailing Twelve Month
Daily chart (BWY.L)
Business background and investment rationale
Bellway PLC and its subsidiaries’ principal engagement is house building in the UK. The company is a volume house builder selling primarily in the private market and trading nationally in areas of high population. It also acquires and sells second hand homes taken in part exchange.
Increased sale for first half
In an interim result announced last month, Bellway sold 2,247 homes in the six months ending 31 January 2010; an increase of 11.6% over the same period in 2009. The average house price was £155.8k, a slight reduction on the £156.1k achieved in 2009. Group revenue increased by 12.6% from £320.2m to £360.8m for the first half of the year. Bellway also reported an operating margin of 6.1% achieved in the period, which resulted in an operating profit of £22.1m. This compares to an operating loss, after exceptional items, of £36.8m in 2009. At the end of January, the group had a net cash position of £60.9m which was bolstered by placing 5% of its ordinary shares with institutional investors in August, netting £43.7m after costs, and having spent £76m on land and land creditors in the period. Bellway also increased the interim dividend payment by 10% to 3.3 pence per ordinary share.
Strong outlook
During the first half, Bellway’s private sales division completed 1,766 in sales with a further 481 sales to housing associations. This compares with 1,635 private and 379 housing association sales for the same period in 2009. The group has already secured its initial sales target to repeat last year’s volume output of 4,380 and now expects to deliver an additional 150-200 home in the year to 31 July 2010. The order book currently stands at £435.4m, a rise on 2009’s £370m, and includes over 900 homes for 2010/2011. Currently, Bellway is trading from 180 sites and expects to increase this to 200 in next 12 months, of which 40 will come from sites purchased since the onset of the recession. In the coming month, Bellway will concentrate on land acquisition and selectively increasing work in progress, with a particular emphasis on the southern divisions where the market appears to be at a more advanced stage of recovery.
Technical Outlook
On the daily chart, Bellway has moved above the negative trendline joining its 52 week high of 927.5p indicating a bullish signal for the stock. Momentum oscillator MACD is positive and 12 day EMA is above 26 day EMA indicating strength in trend. RSI is above 60 indicating strength in the positive trend. 14 day positive DMI is above 14 day negative DMI and ADX is above 30 indicating a strong positive trend. Stock has immediate resistance at 800.0p and support near 700.0p. Stock has to consolidate above 800.0p for an uptrend.
Trading strategy
Stock can be bought near 765.0p with a profit target of 853.2p and stop loss of 726.6p.
Stocks Update
Imperial Tobacco Group PLC
Imperial hit a reduced loss target of 2020.0p last week indicating weakness in stock prices, although the stock recovered from its low of 1964.0p signifying some consolidation. MACD is in negative territory, while 12 day EMA is below 26 day EMA indicating weakness in prices. 14 day RSI is above 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. All positions should be closed for the stock.
Whitbread PLC
On the daily chart, Whitbread is recovering from its low of 1470.0p and is above 1500.0p indicating some recovery in prices. MACD is positive and 12 day EMA is just below 26 day EMA, showing weakness in uptrend for the stock. 14 day RSI is above 50 indicating strength in the stock. Positive DMI is above negative DMI while ADX is near 13 which both indicate recovery in uptrend. Stock is trading above 20 day and 50 day EMA signifying an uptrend for the stock. Stock should be a hold with a reduced profit target of 1550.0p.
Kazakhmys PLC
On the daily chart, Kazakhmys made a small dip of 1541.0p and is again trading near 1600.0p indicating the uptrend is intact for the stock. MACD is positive and 12 day EMA is just below 26 day EMA, indicating a recovery in uptrend. 14 day RSI is near 60 indicating strength in trend. Positive DMI is above negative DMI, while ADX is near 21 indicating an uptrend is forming. Stock is above 20 day and above 50 day EMA showing a positive trend. Stock should be a hold with same profit target of 1673.0p.
Centrica PLC
Last week Centrica made a new 52 week high of 303.0p indicating a positive trend for the stock. MACD is positive and 12 day EMA is just below 26 day EMA, which indicates uptrend. 14 day RSI is above 60 showing 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.
John Wood Group PLC
On the daily chart, the stock is trading again near its 52 week high of 391.5p indicating a positive trend. MACD is positive and 12 day EMA is just above 26 day EMA indicating a rebound in prices. RSI is near 60 indicating strength in trend. 14 day positive DMI is above 14 day negative DMI, while ADX is near 14 indicating a positive trend is forming. Stock has resistance at 400.0p, and support near 350.0p and is above 20 day and 50 day EMA, all of which indicate an uptrend for the stock. Stock should be a hold with the same profit target.
Anglo American PLC
On the daily chart, Anglo American recovered a small dip from its low of 2877.0p indicating a positive trend is intact in the stock. MACD is positive and 12 day EMA is above 26 day EMA, also indicating a positive trend for the stock. 14 day RSI is near 70, again showing a positive trend supported by a positive slope in MACD and RSI. Positive DMI is above negative DMI, while ADX is near 30 signifying a strong uptrend in stock prices. The stock is also above 20 day and 50 day EMA indicating a bullish signal. Stock should be a hold with the same profit target.
Afren PLC
On the daily chart, stock has dipped from its entry price of 104.0p but is still trading above 100.0p which is quite encouraging. Momentum oscillator MACD is positive and 12 day EMA has crossed below 26 day EMA indicating some weakness in the uptrend. RSI is above 50 indicating strength in uptrend. 14 day positive DMI is above 14 day negative DMI, while ADX is near 31 indicating uptrend in prices. For a higher move stock has to move above 105.0p and consolidate above 100.0p. 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 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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