| Sector |
Mining |
Last closing price
(01/06/2010) (p) |
6195.0 |
| 52 week High/Low (p) |
6285.0/3351.0 |
| Market Cap (£bn) |
5.38 |
Sector weight age by
Market Cap (%) |
2.4 |
| Average Volume (k) |
543.02 |
| P/E ratio (TTM) |
96.28 |
Sector P/E
ration (TTM) |
26.87 |
TTM: Trailing Twelve Month
Daily chart (RRS.L)
Business background and investment rationale
Randgold Resources LTD is engaged in gold mining and exploration. Its discoveries include the seven and a half million ounce Morila deposit in southern Mali, the seven million ounce Yalea deposit at Loulo in Western Mali and the four million ounce Tongon deposit in the Cote d’Ivoire.
Increase in gold production
In a first quarter result announced last month, Randgold’s attributable gold production for the first quarter was up 2% to 112,663 ounces while profit was up 83% on the corresponding quarter in 2009. Gold sales increased by 41% compared to the same period last year due to a 37% increase in the average gold price for the same quarter in 2009, as well as a small increase in attributable production quarter on quarter. Randgold commenced mining at its new Tongon project in the Cote d'Ivoire, in line with its growth plan designed to boost attributable production to 1.2 million ounces in 2014, it has initiated the development of the second underground mine at its Loulo complex in Mali.
Significant progress in exploration activities
Randgold made significant progress with key issues relating to the development of the Kibali project in the Democratic Republic of the Congo. These include the relocation action plan, a road upgrade, power strategy and the ore body definition and evaluation. The project, currently scheduled to start producing in 2014, continues to deliver exceptional drill results indicative of its enormous potential. The group continued to advance the feasibility studies on the Massawa project in Senegal and the Gounkoto project in Mali. At Massawa the metallurgical challenges associated with the ore body were being assessed, while the latest drill results from the fast-tracked Gounkoto project pointed to further potential for extensions to an already spectacular ore body.
Technical outlook
On the daily chart, Randgold is making an uptrend on strong gold prices and is in a consolidation phase with support in a band of 5500.0p and 5700.0p. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) has cross above 26 day EMA, indicating formation of an uptrend. This is supported by the 14 day RSI (relative strength index) above 60, with both making higher lows which indicate an uptrend. Randgold is trading above 20 day and 200 day EMA, indicating uptrend. 14 day positive DMI (directional moving index) is above 14 day negative supporting uptrend. Stock has to break 6285.0p for a further uptrend.
Trading strategy
The stock can be bought around 6050.0p with a profit target 6655.0p and stop loss of 5786.0p.
| Sector |
Tobacco |
Last closing price
(01/06/2010) (p) |
2115.0 |
| 52 week High/Low (p) |
2335.0/1637.0 |
| Market Cap (£bn) |
40.78 |
Sector weight age by
Market Cap (%) |
68.91 |
| Average Volume (mn) |
4.81 |
| P/E ratio (TTM) |
14.99 |
Sector P/E
ration (TTM) |
10.64 |
TTM: Trailing Twelve Month
Daily chart (BATS.L)
Business background and investment rationale
British American Tobacco PLC (BAT) is an international company which sells cigarettes, cigars, leaf and other tobacco products. It has over 300 brands in its portfolio which are sold in more than 180 markets. BATS has four Global Drive Brands (GDB): Dunhill, Kent, Lucky Strike and Pall Mall.
Strong growth in emerging markets
In an interim management statement announced in April 2010, the GDB delivered good performance achieving an overall increase in volume of 6% in addition to share growth in a number of key markets. Dunhill was up 24%, helped by the migration of Carlton to Dunhill in Brazil, while Lucky Strike and Pall Mall grew by 8% and 10% respectively. Kent volumes were driven 12% lower following industry volume declines in Japan, Russia and Romania, although the brand did manage to grow and maintain its market share in those countries. The group’s revenue grew in constant currency terms for the three months, driven by continued strong pricing momentum and the acquisition of PT Bentoel Internasional Investama Tbk (Bentoel) in Indonesia on 17 June 2009. All regions increased revenue at constant rates of exchange with particularly strong performances from Africa, the Middle East and the Americas. Revenue benefited further from the favourable impact of exchange rate movements.
Improvement in productivity savings
BATS made further progress with productivity savings and is on track to reduce costs by £800m in 2012, which is in addition to the £1bn saved between 2003 and 2007. The principal areas of focus continue to be the supply chain through initiatives such as the Global Leaf Pool program and a reduction in overheads and indirect costs. To increase its presence in the Asia-Pacific region BATS acquired Indonesia’s fourth largest cigarette maker Bentoel for £352m. In the period from 17 June 2009 to 31 December 2009, the acquired business contributed revenue of £105m and profit from operations of £6m.
Technical outlook
BATS is in a consolidation phase near 2000.0p after the stock moved above the downtrend trendline indicating a bottom has formed in the stock. MACD is negative but 12 day EMA has moved above 26 day EMA supporting consolidation. 14 day RSI is trading near 50 from the oversold zone suggesting strength in the formation of a positive trend. It has also crossed above 20 day and 200 day EMA, supporting a positive trend. Negative 14 day DMI is above positive 14 day DMI indicating a negative trend, but ADX is near 38 supporting a fast rise in prices in a positive direction. If the stock holds the level above 2000.0p a higher move can be expected, with resistance near 2100.0p.
Trading strategy
The stock can be bought around 2085.0p with a profit target 2293.5p and stop loss of 1994.0p.
Stocks Update
Chemring Group PLC
On the daily chart, Chemring continues in a negative trend hitting the profit target of 3184.0p and making a low of 3066.0p. MACD is negative and 12 day EMA is below 26 day EMA, indicating a negative trend in the stock. 14 day RSI is near 30 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. All positions should be closed for the stock.
Compass Group PLC
Compass has hit the reduced profit target of 535.0p in a rebound from its low of 510.5p. 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 the share price. All positions should be closed for the stock.
Aquarius Platinum LTD
In a volatile trading week Aquarius hit the stop loss of 390.6p after falling to 339.8p. The double top reversal pattern between 351.0p and 460.0p is still intact as the share price is trading below the entry price of 372.0p indicating a bearish trend for the stock. MACD is negative and 12 day EMA is below 26 day EMA, indicating a bearish trend. 14 day RSI is below 50 showing a weakness in trend. ADX is near 20 and 14 day negative DMI is above 14 day positive DMI indicating a negative trend. All positions should be closed for the stock.
Aggreko PLC
On the daily chart Aggreko hit stop the loss of 1265.4p indicating the consolidation between 1170.0p and 1300.0p is intact, which suggests a bullish trend for the stock. MACD is positive and 12 day EMA is above 26 day EMA indicating a bullish trend is forming in the stock. RSI is also above 50 and making a new top supporting the bullish trend. Stock prices are also trading above 20 and 50 day EMA confirming the positive trend. 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.
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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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