| Sector |
Software & Computer services |
Last closing price
(21/06/2010) (p) |
1392.0 |
| 52 week High/Low (p) |
1491.0/1040.0 |
| Market Cap (£mn) |
520.31 |
Sector weight age by
Market Cap (%) |
1.98 |
| Average Volume (k) |
85.91 |
| P/E ratio (TTM) |
24.61 |
Sector P/E
ration (TTM) |
10.33 |
TTM: Trailing Twelve Month
Daily chart (FDSA.L)
Business background and investment rationale
Fidessa Group PLC supplies; multi-asset trading, portfolio analysis, decision support, investment compliance, market data and connectivity solutions for both the buy-side and sell-side globally.
Strong revenue
For the full year end to 31 December 2009, Fidessa reported strong growth with revenues climbing to £238.5m; a rise of 26% on the same period last year and a rise of 17% on a constant currencies basis. This strong growth was driven by momentum in recurring revenue, which increased by 32% to £193.9m from £146.5m in 2008 and now represents 81% of the firm’s total revenue. The business has no debt and continues to be cash generative closing the year with a cash balance of £45.5m, compared to £33.1m in 2008. Fidessa continues to generate cash from operations and the operating cash conversion rate was 167%. The group also declared a dividend of 60.0p, including a 40.0p special dividend based on strong performance.
Despite pressure in the financial markets, usage of Fidessa’s network has continued to increase with traffic up by over 40% since the end of 2009, reaching approximately 250 million messages a month. This means Fidessa is carrying business flows of around $640bn every month.
Benefit from increased regulations
Following the economic crisis in 2008, the financial industry is anticipating increased regulation and the outcome from ongoing regulatory reviews is likely to result in changes to workflow and increased reporting requirements. These changes should benefit Fidessa on both the buy-side and sell-side, as firms look for a leading automated compliance and reporting solution to meet their obligations without incurring substantial costs.
Technical outlook
On the daily chart, Fidessa is in an uptrend after it broke above the negative trend line joining its 52-week high of 1491.0p supported by 20 day EMA (exponential moving average) crossed above 50 day EMA. MACD (moving average convergence/divergence) is positive and 12 day EMA recently crossed above 26 day EMA, indicating an uptrend in the stock. 14 day RSI (relative strength index) is near 60 and both the indicators are making an uptrend. 14 day positive DMI (directional moving index) is above 14 day negative and ADX (average directional index) is near 15 indicating an uptrend. Stock is above 20 day and 50 day EMA indicating an uptrend for the stock. Stock has strong resistance near 1500.0p and support near 1250.0p.
Trading strategy
The stock can be bought around 1350p with a profit target 1505.7 p and stop loss of 1282.3 p.
| Sector |
Support services |
Last closing price
(21/06/2010) (p) |
230.6 |
| 52 week High/Low (p) |
245.0/134.25 |
| Market Cap (£mn) |
984.01 |
Sector weight age by
Market Cap (%) |
1.55 |
| Average Volume (mn) |
1.88 |
| P/E ratio (TTM) |
18.71 |
Sector P/E
ration (TTM) |
14.99 |
TTM: Trailing Twelve Month
Daily chart (ECM.L)
Business background and investment rationale
Electrocomponents plc is a distributor of electronics, electrical, industrial and commercial supplies and services to engineers worldwide, through its operating companies and distributors.
Improvement in sales
In a preliminary result announced on 28th May 2010, Electrocomponent sales for the first seven weeks improved sharply with group sales growing by around 23%. International business grew by around 29% and the UK sales grew by around 11%. European sales grew by around 21%, North America by around 43% and Asia Pacific by around 29%. Group sales were flat for the first half and grew by 6% in the second. e-Commerce continues to be an increasing proportion of Group sales. In January e-Commerce revenue grew by around 30% to around 46% of Group sales with North America showing particularly strong performance, growing by around 90%. The Group raised its longer term target for e-Commerce revenue share to 70%.
Cost savings and improvement in margins
In light of the sales downturn in 2008-09 the group reduced its operating costs by 5% at constant foreign exchange and achieved £18m of savings by reducing 8% of its workforce as well as other significant measures including process optimisation between the UK and Continental Europe businesses. In logistics activity the group successfully redistributed its two UK warehouses and also benefited from catalogue cost efficiencies.
Technical outlook
On the daily chart, Electrocomponenents continues in a positive trend after it broken above the negative trendline joining its 52 week high of 245.0p supported by 20 day EMA cross above 50 day EMA. MACD is positive but 12 day EMA closed above 26 day EMA, indicating a positive trend in the stock. 14 day RSI has also climbed above 60 suggesting an upward trend. 14 day positive DMI is above 14 day negative, while ADX is near 20 indicating an uptrend. Stock has resistance near 245.0p and support near 200.0p.
Trading strategy
The stock can be bought around 225.0p with a profit target 250.9 p and stop loss of 213.7 p.
Stocks Update
Randgold Resources PLC
On the daily chart, Randgold made a new 52 week high of 6590.0p indicating an uptrend in the stock. The stock is trading above 20 day and 200 day EMA, indicating an uptrend in the stock. MACD is positive and 12 day EMA has crossed above 26 day EMA indicating uptrend in the stock. 14 day RSI is above 70, with both making higher lows which suggest an uptrend. 14 day positive DMI is above 14 day negative supporting the uptrend. Stock should be a hold with the same profit target.
BATS PLC
BATS hit the reduced profit target of 2200.0p making a high of 2215.0p last week indicating an uptrend in the stock. MACD moved in a positive direction and 12 day EMA moved above 26 day EMA supporting the uptrend. 14 day RSI is above 60 suggesting strength in the formation of a positive trend. Positive 14 day positive DMI is above negative 14 day DMI indicating a positive trend. All the positions should be closed for the stock.
Autonomy Corporation PLC
Autonomy hit the profit target of 1985.0p making a new high of 2012.0p after it has broken above the major resistance level of 1900.0p. MACD is positive and 12 day EMA is above 26 day EMA supporting the uptrend. 14 day RSI is trading near 70 suggesting strength in the positive trend. Positive 14 day DMI is above negative 14 day DMI indicating a positive trend. All the positions should be closed for the stock.
Chemring group PLC
On the daily chart, Chemring continues in a positive trend and consolidating around 3400.0p after it broke above the negative trendline joining its 52 week high of 3711.0p supported by trading above 20 day and 50 day EMA. MACD is positive and 12 day EMA is above 26 day EMA, indicating a positive trend in the stock. 14 day RSI is also above 50 suggesting an upward trend. 14 day positive DMI is above 14 day negative, while ADX is near 20 indicating an uptrend in the formation. Stock should be a hold with same profit target.
WS Atkins PLC
On daily chart, Atkins hit the stop loss of 683.9p in a volatile week after it fell below 700.0p. Stock is still in the uptrend as MACD is positive and 12 day EMA is above 26 day EMA indicating strength in the uptrend. 14 day RSI is above 50 showing a strong positive trend. 14 day positive DMI is above 14 day negative and ADX is near 18 indicating positive trend. Stock is still above 200 day EMA supporting the long term uptrend in the stock. All the 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.
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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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