| Sector |
Oil Equipment services & Distribution |
Last closing price
(26/04/2010) (p) |
869 |
| 52 week High/Low (p) |
891.0/590.0 |
| Market Cap (£bn) |
2.86 |
Sector weight age by
Market Cap (%) |
21.5 |
| Average Volume (mn) |
1.46 |
| P/E ratio (TTM) |
18.52 |
Sector P/E
ration (TTM) |
5.98 |
TTM: Trailing Twelve Month
Daily chart (AMEC.L)
Business background and investment rationale
AMEC is an international consultancy, engineering and project management company providing services to the world’s energy, power & process industries. The company designs, maintains and manages the delivery of strategic and complex assets. These include offshore oil & gas production facilities, metals or mineral mines and power infrastructure.
Improved EBITA margin and strong financial position
Driven by its own internal initiatives, AMEC delivered 110 basis points improvement in earnings before interest, taxes and amortization (EBITA) margin in 2009. In 2010, AMEC will invest £5m in an Operational Excellence program with an annual benefit of £40m; up from the £18m in 2009.The Operational Excellence program is expected to be the major contributor to achieving the target margin of 8.5% in 2010. The group is in exceptionally strong financial position with a relatively well funded pension scheme and £743m net cash at 31 December 2009. For 2009 AMEC increased its dividend by 15% to 17.7p.
Strong order book
By 31 December 2009 the group’s order book was £3.2bn and AMEC expects the project pipeline to accelerate as the year progresses. In January 2010 The Gateway Storage Company selected AMEC to do the front-end engineering design (FEED) for both the offshore and onshore elements of the £600m Gateway offshore underground gas storage scheme. In February 2010 AMEC was selected by Brazilian company, QUIP, to perform basic engineering services for the topsides of the P-63 floating production, storage and offloading (FPSO) vessel, to be operated on behalf of Petrobras, Brazil’s national oil company. In April 2010 AMEC and its joint venture partners Jacobs and Stork secured a three-year integrated services contract extension worth €200m per year with Shell ONEgas Southern North Sea (SNS) as a result of continued exceptional performance and business improvement. Last week EDF awarded AMEC with an 11-year contract to support their Architect Engineering operation for the proposed delivery of four new European Pressurised Water Reactor nuclear reactors at Hinkley Point and Sizewell in the UK.
Technical outlook
On the daily chart, AMEC is on the verge of breaking out from a round pattern between 733.0p to 876.0p, indicating the 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 positive and 12 day EMA is above 26 day EMA, showing an uptrend in the stock. 14 day RSI (relative strength index) is above 60, supporting strength in trend. 14 day positive DMI (directional moving index) is above 14 day negative DMI which indicates the stock is in uptrend. Stock has resistance at 950.0p and support at 825.0p level.
Trading strategy
The stock can be bought around 855.0p with a profit target 948.5p and stop loss of 814.3p.
| Sector |
Software & Computer services |
Last closing price
(26/04/2010) (p) |
1222 |
| 52 week High/Low (p) |
1237/525.0 |
| Market Cap (£mn) |
812.94 |
Sector weight age by
Market Cap (%) |
3.1 |
| Average Volume (k) |
238.4 |
| P/E ratio (TTM) |
21.96 |
Sector P/E
ration (TTM) |
8.76 |
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 to its 52 week of 1237.0p indicating formation of an upward trend for the stock supported by trading above 20 day and 50 day EMA. MACD is positive and 12 day EMA is below 26 day EMA, indicating a small correction for the stock. 14 day RSI is near 60 which supports strength in trend. 14 day positive DMI has crossed above 14 day negative DMI which indicates the stock is forming an uptrend. Stock has resistance at 1300.0p and support at 1100.0p level.
Trading strategy
The stock can be bought around 1200.0p with a profit target 1338.3p and stop loss of 1139.8p
Stocks Update
Kazakhmys PLC
On the daily chart, Kazakhmys fell below 1500.0p hitting the stop loss of 1424.8p indicating the uptrend is broken for the stock. MACD is negative and 12 day EMA is below 26 day EMA, suggesting downtrend in the stock. 14 day RSI is below 50 indicating weakness in trend. Positive DMI is below negative DMI, while ADX is near 17 indicating downtrend in the stock. All positions should be closed for the stock.
Centrica PLC
Centrica made a new 52 week high of 314.1p today, hitting a reduced profit target of 305.0p, which indicates a positive trend for the stock. MACD is positive and 12 day EMA has crossed above 26 day EMA suggesting an uptrend. 14 day RSI is above 70 showing strong uptrend in the stock. Positive DMI is above negative DMI, while ADX is near 28 showing an uptrend in stock prices. The stock is also above 20 day and 50 day EMA indicating an uptrend in the stock. All positions should be closed for the stock.
John Wood Group PLC
Wood Group broke out from the channel between 365.0p and 391.0p hitting a reduced profit target of 391.0p, suggesting a strong uptrend in the stock. MACD is positive and 12 day EMA is above 26 day EMA indicating a rebound in prices. RSI is above 60 suggesting strength in uptrend. 14 day positive DMI is above 14 day negative DMI, while ADX is near 14 indicating a positive trend with the stock having to further rise. All positions should be closed for the stock.
Anglo American PLC
On the daily chart, Anglo American fell below 2800.0p hitting the stop loss of 2811.0p, indicating the uptrend is broken for the stock. MACD is positive and 12 day EMA is below 26 day EMA, suggesting a downtrend in the stock. 14 day RSI has move above below 50 indicating some price rebound today. Positive DMI has just crossed above negative DMI indicating a price rebound. All positions should be closed for the stock.
Aquarius Platinum PLC
Last week the stock spent most of the time in negative trend, but today it moves in a positive trajectory indicate some positive trend is forming in the stock. MACD is positive and 12 day EMA is below 26 day EMA, showing some weakness in the upside trend. 14 day RSI is above 50 showing strength in trend. ADX is near 20 indicating the formation of an uptrend, with 14 day positive DMI 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 the stock has to consolidate above 450.0p. Stock should be a hold with the same profit target.
Bellway PLC
On the daily chart, Bellway broke out from above the negative trendline joining its 52 week high of 927.5p, indicating strong uptrend for the stock. Momentum oscillator MACD is positive and 12 day EMA has crossed above 26 day EMA showing uptrend in the stock. RSI is near 70 indicating strength in the positive trend. 14 day positive DMI is above 14 day negative DMI and ADX is above 22 indicating uptrend in the stock. Stock should be a hold with the same profit target.
SSL International PLC
On the daily chart, SSL is trading around 850.0p after a correction with the upside trend intact and entry could only be taken at 843.5p above entry point 835.0p. MACD is positive and 12 day EMA has crossed below 26 day EMA, indicating some correction from its 52 week high of 893.5p. 14 day RSI is above 60 showing strength in trend. 14 day positive DMI is above 14 day negative and ADX is near 40, indicating a strong long-term uptrend. Stock is also above 20 day and 50 day EMA which supports the strength in trend. Stock should be a hold with the same profit target with a new stop loss of 801.1p.
BATS PLC
BATS is in consolidation between 2150.0p and 2200.0p and is not making a new low, which is an encouraging sign. Entry for the stock could be taken at 2163.5p above recommended price of 2145.0p The trend for the stock looks negative as MACD is negative and the 14 day RSI is trading near to 40. It is also trading below 20 day, 50 day and 200 day EMA, supporting a downward trend. Negative 14 day DMI is above positive 14 day DMI indicating a negative trend. If the stock closes above 2200.0p a higher move can be expected. Stock should be a hold with the same profit target and new stop loss of 2055.0p.
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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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