| Sector |
Mining |
Last closing price
(24/05/2010) (p) |
365.0 |
| 52 week High/Low (p) |
490.0/172.75 |
| Market Cap (£bn) |
2.78 |
Sector weight age by
Market Cap (%) |
0.77 |
| Average Volume (mn) |
3.76 |
| P/E ratio (TTM) |
18.54 |
Sector P/E
ration (TTM) |
2.3 |
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 the third quarter result for 2009/10 announced in April 2010, Aquarius’ attributable production was 103,286 PGM ounces; 8% down from the second quarter. The fall in production followed a lower number of shifts worked in the quarter due to the Christmas holiday break, teething problems at Blue Ridge Mine and reduced availability of feed material at tailings retreatment operation. Aquarius has already resolve these issues. The company has recorded a 257% increase in profits after tax for the second quarter. Profits for the quarter ending 31 March 2010, were $23.3m, up from a $6.5m last year. In spite of lower production, revenues increased by 64% to $128.8m following higher PGM prices. 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. Average group basket prices were 16% higher than the previous quarter at $1267 per ounce. The group expects the continuing strength of the rand and rising input costs, most notably of electricity, to place further pressure on margins in the South African platinum industry.
Strong outlook
The improvement in the dollar basket price during last two quarters of the 2009/10 financial year enabled Aquarius to return to profitability. Auto companies also have begun re-stocking in response to slowly improving consumer sentiment in the US, EU and Japan and increased demand for imported luxury vehicles in China. This has driven the prices of not only platinum and palladium but also that of rhodium, a key indicator of auto manufacturing activity. Platinum jewellery demand from China remained robust in third quarter as well.
Technical outlook
On the daily chart Aquarius is trading at a support level of 360.0p after making a double top reversal pattern between 351.0p and 460.0p indicating a bearish trend for the stock. MACD (moving average convergence/divergence) is negative and 12 day EMA (exponential moving average) is below 26 day EMA, indicating a bearish trend. 14 day RSI (relative strength index) is below 50 showing a weakness in trend. ADX (average directional index) is near 20 and 14 day negative DMI (directional moving index) is above 14 day positive DMI indicating a negative trend. Stock is also above 20 day and 200 day EMA which supports a downside trend. For a double top reversal, the stock must be confirmed as falling below 350.0p. The stock has resistance near 316.0p with support near 400.0p.
Trading strategy
The stock can be sold around 372.0p with a profit target 329.1p and stop loss of 390.6p
| Sector |
Support services |
Last closing price
(24/05/2010) (p) |
1192.0 |
| 52 week High/Low (p) |
1237/561.51300/476.25 |
| Market Cap (£bn) |
3.21 |
Sector weight age by
Market Cap (%) |
5.31 |
| Average Volume (mn) |
1.66 |
| P/E ratio (TTM) |
18.79 |
Sector P/E
ration (TTM) |
8.97 |
TTM: Trailing Twelve Month
Daily chart (AGK.L)
Business background and investment rationale
Aggreko PLC provides electrical power and temperature control to customers needing them quickly, or for a short or indeterminate length of time. The company operates globally with 133 service centres and offices in 31 countries.
Strong start in 2010
In an interim management statement announced in April 2010 the group had a strong start to the year. Total revenues in the three months to 31 March 2010 grew by 5% on a headline basis and by 8% on a constant currency basis excluding pass-through fuel. International Power Projects’ revenues grew by 8% excluding pass-through fuel, while order intake hit a new record in the first quarter with 18 new projects contracted, representing over 440 MW (megawatts) of new capacity. Aggreko expects the growth-rate of capacity on rent to accelerate markedly during the second quarter as recent project wins are commissioned. Local business revenues in constant currency grew by 8%, helped by revenues from the Vancouver Winter Olympics and the FIFA World Cup.
Debt reduction and strong outlook for 2010
In the first three months to 31 March 2010, net debt decreased by £12m to £164m and was £163m lower than at 31 March 2009. In light of the strong order intake in International Power Projects, the group expects fleet capital expenditure to be around £220m, which is £20m higher than previous guidance. With total facilities of £467m, Aggreko has ample headroom to finance the needs of the business. The group expects to deliver a strong first half and will benefit in the strengthening of the dollar against sterling because 70% of the group’s earnings is in the US currency.
Technical Outlook
On the daily chart Aggreko is trading at a support level of 1177.0p after making a triple top reversal pattern between 1170.0p and 1300.0p, indicating a bearish trend for the stock. MACD is positive and 12 day EMA is below 26 day EMA further indicating a bearish trend is forming in the stock. RSI is also below 50 and making new lows on three tops supporting the bearish trend. Stock prices are also trading below 20 and 50 day EMA confirming the negative trend. Negative DMI is above positive DMI indicating a negative trend. Stock has resistance at 1100.0p and support at 1300.0p
Trading Strategy
Stock can be sold around 1205.0p with a profit target of 1066.0p and stop loss of 1265.4p.
Stocks Update
Chemring Group PLC
On the daily chart, Chemring continues in a negative trend after it just missed the profit target of 3184.0p making a low of 3195.0p. MACD is negative and 12 day EMA is below 26 day EMA, indicating a negative trend in the stock. 14 day RSI has fallen below 40 and making a lower low suggesting a downward trend. 14 day negative DMI is above 14 day negative, while ADX is near 30 indicating a downward trend. Stock is still trading below 3300.0p indicating that it has broken the long-term uptrend. The stock should be a hold with same profit target.
John Wood Group PLC
On the daily chart, the stock hit the stop loss of 334.5p indicating a negative trend after it broke a support level of 350.0p. This is supported by the stock trading below 200 day EMA which suggests the long-term uptrend is broken. MACD is negative and 12 day EMA is below 26 day EMA indicating a negative trend. RSI is below 50 confirming the negative trend. 14 day negative DMI is still above 14 day positive DMI, while ADX is near 17 showing a negative trend in the stock. All positions should be closed for the stock.
Compass Group PLC
Compass has broken its bullish trend after making a low of 519.0p near to its entry point confirmed by the stock trading below 20 day EMA. MACD is positive and 12 day EMA has crossed below 26 day EMA, indicating a negative trend in the stock. 14 day RSI is below 50 showing weakness in strength. Negative 14 day DMI is above positive 14 day DMI showing weakness in share prices. Looking at the negative trend, the stock should be a hold with a reduced profit target of 535.0p.
SSl International PLC
On the daily chart, the stock hit the stop loss of 769.3p indicating a negative trend in the stock after it broke the support level of 800.0p. MACD is negative and 12 day EMA is below 26 day EMA indicating a negative trend. RSI is below 50 confirming a negative trend. 14 day negative DMI is still above 14 day positive DMI, while ADX is near 24 showing a negative trend in the stock. All positions should be closed for the stock.
Aveva Group PLC
On the daily chart, Aveva hit the stop loss of 1063.8p making a low of 1060.0p, which indicates the formation of a negative trend for the stock supported by trading below 20 day and 50 day EMA. MACD is negative and 12 day EMA is below 26 day EMA, indicating downside trend in the stock. 14 day RSI is below 50 supporting weakness in the trend. 14 day negative DMI has crossed above 14 day positive DMI which indicates the stock is in a downtrend. All positions should be closed for the stock.
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.
The report is provided solely for your information and may not be reproduced or redistributed, in whole or in part to any other person without specific consent of CSS Partners.
In the preparation of this report, CSS Partners has had access to publicly available information and other sources believed to be reliable. Whilst reasonable care has been taken to ensure that the facts stated herein are accurate and that the recommendations, forecasts, opinions and expectations contained herein are fair and reasonable, neither the author, nor CSS Partners, nor CSS has verified the public information upon which this is based. None of the author, CSS Partners, CSS or any of their respective directors, officers or employees (the “Parties”) makes any representation or warranty, express or implied as to soundness of the recommendation, the accuracy or completeness of the information or opinions contained herein. Investors must make their own investment decision and not rely on this report. The Parties shall not be liable for any loss, costs, liability, expenses (together “losses”) suffered by you following your utilising any of the services we provide other than losses arising directly as a result of fraud or wilful default on our part or as a result of any liability that may not be excluded under the UK regulatory system. In no event shall we be liable for special, indirect or consequential damages of any kind, even though we may have been informed about the possibility of such loss. You shall indemnify us and our officers and employees on demand and keep all such persons indemnified against all losses which may be incurred directly or indirectly by reason of or in consequence of providing this service save to the extent that such losses arise directly as a result of our, fraud or wilful default.
Any opinions, forecasts or estimates herein constitute a judgment as at the date of this report. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. This information is subject to change without notice. It may be incomplete or condensed and it may not contain all material information concerning the Company. This document does not constitute or form part of and should not be construed as any offer for sale or purchase of (or solicitation of or invitation to make any offer to buy or sell) any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.
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.
In accordance with section 12.4 of the FSA’s New Conduct of Business Rules, CSS Partners makes the following disclosures:
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.
The analyst is not involved in any other activity of CSS Partners or CSS that is inconsistent with his objectivity in preparing the reports. His research information is confidential, the only persons privy to this data bar the analyst are senior management. The research recommendations will be updated, but neither CSS nor CSS Partners accept any responsibility for any delay or interruption of service in the submission of reports or updates to reports.
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.
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.
