| Sector |
Personal goods |
Last closing price
(12/07/2010) (p) |
860.0 |
| 52 week High/Low (p) |
893.5/522.5 |
| Market Cap (£bn) |
1.85 |
Sector weight age by
Market Cap (%) |
24.6 |
| Average Volume (k) |
351.9 |
| P/E ratio (TTM) |
26.23 |
Sector P/E
ration (TTM) |
7.8 |
TTM: Trailing Twelve Month
Daily chart (SSL.L)
Business background and investment rational
SSL International PLC (SSL) is a consumer products company with a diverse portfolio including the global brands Durex and Scholl, as well as locally owned companies such as Meltus, Medised and Syndol in the UK and Sauber and Mister Baby in Southern Europe.
Strong sales and double digit operating profit growth
In the preliminary results for the year announced in May 2010, SSL reported a 24.9% increase in sales and a 5.7% growth in existing operations. The group revealed operating profits of £126m, 40.8% ahead of 2009’s £89.5m and reported a 20% growth in earnings per share (EPS), which reached 33.6p from 28.0p. The company’s final dividend was up 25% to 8p per share, which compares to 6.4p in 2009. Durex sales grew 4.8% to £293.7m driven by strong growth in China, Poland, Hungary and Germany, complemented by excellent performances in Eastern Europe and the developing territories such as the Middle East. The Durex Play range also reported an 8.4% growth in sales, reflecting the launch of Play O and the continuing advance of the Durex Play Massage range. Scholl Footcare has performed strongly following launches such as the Deo-Activ fresh range of foot deodorants and Cracked Heel Repair Cream K+. Scholl Footwear benefited from positive growth in Asia and solid performances in the major European territories. A continued focus on costs and geographic diversity means SSL is confident it will achieve a 50% growth in EPS by March 2012.
Improvement in operating margin and acquisitions
SSL’s gross profit increased to £423.4m, which compares to £405.7m in 2009 and represents a gross margin of 62.3% compared with 60.8% in the previous year. This improvement demonstrates the continuing benefits derived from the restructuring of the group’s supply chain and the beneficial mix of good growth in the higher margin branded consumer business and the reduction in noncore, lower-margin sales.The improvement was also supplemented by profit generation from Durex, Scholl and other brands. To increase its presence in the Commonwealth of Independent States (CIS) SSL made two acquisitions. First it increased its stake to 75% in Beleggingsmaatschappij Lemore BV (BLBV) - a business primarily engaged in the packaging and distribution of condoms and medical products across CIS region and agreed a further option to increase the shareholding to 100% exercisable in 2011. Secondly SSL acquired Gainbridge a holding company engaged in the packaging and distribution of condoms and medical products in the Ukraine. In May 2010 SSL acquired Polish condom brand, Rosetex for £3.9m.
Technical outlook
On the daily chart, SSL is trading above the channel between 770.0p and 850.0p with higher lows indicating a positive trend is forming, supported by the 20 day EMA (exponential moving average) crossing above 50 day EMA. MACD (moving average convergence/divergence) is positive and 12 day EMA is above 26 day EMA, indicating a positive trend in the stock. 14 day RSI (relative strength index) is near 60 indicating strength in the trend. Both the indicators are above the negative trend line joining its 52 week high of 893.5p which confirms the uptrend in the stock.14 day positive DMI (directional moving index) is above 14 day negative and ADX (average directional index) is near 19, indicating consolidation. The stock has to stay above 870.0p for an uptrend with support at 800.0p.
Trading strategy
The stock can be bought around 850.0p with a profit target 948.0p and stop loss of 807.4p.
| Sector |
Industrial Engineering |
Last closing price
(12/07/2010) (p) |
215.5 |
| 52 week High/Low (p) |
237.1/83.0 |
| Market Cap (£mn) |
399.7 |
Sector weight age by
Market Cap (%) |
3.38 |
| Average Volume (k) |
357.8 |
| P/E ratio (TTM) |
29.15 |
Sector P/E
ration (TTM) |
10.6 |
TTM: Trailing Twelve Month
Daily chart (FENR.L)
Business background and investment rationale
Fenner PLC manufacturers and distributes conveyor belting and reinforced precision polymer products. It operates in two segments: conveyor belting and advanced engineered products.
Strong result
In the half year results announced in April 2010, the group reported a strong financial performance with a return to growth and, in particular, a marked improvement in the second quarter over the comparable period last year. Underlying profit before tax increased by 35% to £16.3m compared to £12.1m in 2009, while profit before tax increased to £12.1m compared to just £0.6m in 2009. Underlying earnings per share increased by 28% to 6.4p and net cash generated from operating activities increased by £23m compared to the first half of the previous financial year. Both profits and cash flow reaped the benefits of the last financial year’s cost reduction initiatives and the successful integration of the last two years acquisitions.
Placing shares to institutional investors for acquisitions
As the company emerges stronger from the economic downturn, Fenner intends to enhance its growth with a number of strategic complementary acquisitions, with a particular emphasis on the service activities in Conveyor Belting and in the Medical market. In April 2010 Fenner raised £36.3m to fund three small but strategic acquisitions by issuing 17.3 million new shares at 210.0p to institutional investors, representing approximately 9.9% of the issued share capital. At the start of this month Fenner completed its first acquisition of MRI Medical based in Tucson, Arizona, USA for $2.6m. MRI Medical is a start-to-finish development and manufacturing company that designs, validates and manufactures cutting-edge, silicone-based devices for medical device companies.
Technical outlook
On the daily chart, Fenner is making a higher low and trading above 200.0p indicating an uptrend in the stock, supported by 20 day EMA crossing above 50 day EMA. MACD is slightly positive and 12 day EMA has crossed above 26 day EMA, indicating an uptrend is forming in the stock. 14 day RSI is above 50 and both the indicators are making higher lows supporting strength in the trend. 14 day positive DMI has crossed above 14 day negative DMI which indicates the stock is forming an uptrend. Stock has immediate resistance at 220.0p and has to hold at 200.0p for a further rise.
Trading strategy
The stock can be bought around 210.0p with a profit target 234.2p and stop loss of 199.5p
Stocks Update
Randgold Resources PLC
On the daily chart, Randgold hit the reduced profit target of 6250.0p making lower lows from its 52 week high indicating consolidation in the stock. The stock is trading above 50 day and 200 day EMA, suggesting an uptrend. MACD is positive and 12 day EMA is below 26 day EMA indicating a recent fall in the stock. 14 day RSI is near 50 which indicates consolidation. 14 day positive DMI is just above 14 day negative supporting the consolidation. All positions should be closed for the stock.
Fidessa PLC
On the daily chart, Fidessa hit the reduced profit target of 1380.0p after trading in a range of 1300.0p and 1400.0p, indicating the stock was range-bound last week. MACD is positive and 12 day EMA is above 26 day EMA, indicating an uptrend in the stock. 14 day RSI is above 50 but had flat movement in the last week suggesting consolidation. 14 day positive DMI is above 14 day negative and ADX is near 17 indicating consolidation. All positions should be closed for the stock.
Hikma Pharmaceutical PLC
On the daily chart, Hikma is continuously moving above the positive trendline, indicating a positive trend for the stock supported by trading above 20 day EMA and 50 day EMA. MACD is positive and 12 day EMA is above 26 day EMA, which indicates an uptrend in the stock. 14 day RSI is above 60 suggesting strength in the trend. Positive DMI is above negative DMI, while ADX is near 30 showing an uptrend. The stock should be a hold with the same profit target.
Aggreko PLC
On the daily chart, Aggreko hit the profit target of 1562.0p after a steep rise in the stock. MACD is positive and 12 day EMA is above 26 day EMA indicating an uptrend in the stock. RSI is also above 70 showing strength in the trend following a sharp rise in the stock. Stock prices are also trading above 20 and 50 day EMA confirming a positive trend for the stock. Positive DMI is above negative DMI indicating a positive trend. All positions should be closed for the stock.
BATS PLC
Last week BATS crossed above the negative trend line joining its 52 week high of 2344.0p and staying above key a resistance level of 2200.0p, indicating a positive trend in the stock. Entry for the stock could only be taken at 2115.5p above entry point recommended of 2090.0p. MACD is positive and 12 day EMA is above 26 day EMA indicating an uptrend in the stock. 14 day RSI is trading above 60 with higher lows suggesting strength in the formation of a positive trend. It has also crossed above 20 day and 50 day EMA, supporting a positive trend. Positive 14 day DMI is above negative 14 day DMI indicating a positive trend, but ADX is near 18 supporting consolidation. If the stock holds the level above 2200.0p a higher move can be expected. The stock should be a hold with the same profit target.
Admiral PLC
Last week Admiral hit the stop loss of 1481.7p after the stock continuously moved in an uptrend making a new 52 week high of 1483.0p. MACD is positive and 12 day EMA is above 26 day EMA indicating a positive trend in the stock. 14 day RSI is trading below 60 suggesting strength in the trend. 14 day positive DMI is above 14 day negative DMI, while ADX is near 28 indicating an uptrend in the stock. 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.
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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.
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 April to 30th June 2010:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
88.5% |
23 |
| Hold |
0 |
0 |
| Sell |
11.5% |
3 |
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.
