| Sector |
Support Services |
Last closing price
(30/08/2011) (p) |
1865.0 |
| 52 week High/Low (p) |
2051.0/1377.4 |
| Market Cap (£bn) |
4.79 |
Sector weight age by
Market Cap (%) |
– |
| Average Volume (k) |
862.04 |
| P/E ratio (TTM) |
22.26 |
Sector P/E
ration (TTM) |
17.91 |
TTM: Trailing Twelve Month
Daily chart (AGK.L)
Business background and investment rationale
Aggreko PLC provides electrical power and temperature control to customers in need of them quickly, or for a short or indeterminate length of time. The company operates globally with 144 service centres and offices in 34 countries.
Strong performance for first half of 2011
In the half year results announced last week, group revenues for the six months to 30 June 2011 grew by 9% while trading profit decreased by 3%. On an underlying basis (in constant currency and excluding the one-off impact of the Vancouver Winter Olympics, the FIFA World Cup and the Asian Games as well as pass-through fuel), revenue grew by 21% and trading profit by 17%. International Power Projects revenue grew by 27% in constant currency terms and excluding pass-through fuel. Twenty five new contracts were signed for 730 MW, including major new projects in Japan, Argentina and Tanzania. International Power Projects order book grew to record levels and, at the end of June, was 27% higher than 2010. Average MW on rent for the first half was 25% higher than the prior year and the trading margin ran at a similar level to that achieved for the full year in 2010.
Strong outlook for second half of 2011
The company expects local business to continue to improve over the summer months following the good progress made in the first weeks of the second half of the year. Aggreko achieved double-digit growth in megawatts of power on rent and most Local businesses showed some improvement in rates. Temperature control volumes are at similar levels to last year. With recent contract wins in Cyprus, Iraq and Russia, the group expects its Europe and Middle East business to have a much better second half. Despite political instability in a number of markets, International Power Projects had a good first half. In light of the strong order intake in recent months and the healthy pipeline of enquiries, the group plans to increase the rate of fleet capital expenditure for the full year to around £420m compared with £254.4m in 2010.
Technical Outlook
On the daily chart, Aggreko is making a higher low above 1629.0p indicating the stock has found a high above 1600.0p. Momentum oscillator MACD (moving average convergence/divergence) is negative and 12 day EMA (exponential moving average) has crossed above 26 day EMA supporting a positive trend forming in the stock. 14 day RSI (relative strength index) has crossed above 50 indicating a positive momentum is developing in the stock. Both the indicators are making higher lows with a rising stock price also supporting the positive trend in the stock. 14 day positive DMI (directional moving index) has crossed above 14 day negative DMI, while 14 day ADX (average directional index) is near 24 indicating a positive trend in the stock. The stock has also crossed above 20 and 50 day EMA supporting the positive trend. The stock has support near 1700.0p and resistance near 1915.0p.
Trading Strategy
Stock can be bought around 1840.0p with a profit target of 2030.0p and stop loss of 1757.0p.
| Sector |
Technology hardware & equipment |
Last closing price
(30/08/2011) (p) |
545.0 |
| 52 week High/Low (p) |
652.0/326.0 |
| Market Cap (£bn) |
7.13 |
Sector weight age by
Market Cap (%) |
– |
| Average Volume (mn) |
6.34 |
| P/E ratio (TTM) |
78.53 |
Sector P/E
ration (TTM) |
27.77 |
TTM: Trailing Twelve Month
Daily chart (ARM.L)
Business background and investment rationale
ARM Holdings PLC designs microprocessors, physical library solutions, and related technology and software, in addition to selling development tools.
Growth in non-mobile applications & an upbeat outlook
In the half year results announced in July 2011, ARM technology-based chips continued to gain market share in both mobile and non-mobile applications. ARM signed 29 processor licenses during the second quarter for a broad range of applications including advanced processors for use in new markets such as server infrastructure and mobile computing applications. In addition, leading semiconductor vendors renewed their commitment to ARM's technology roadmap by relicensing and upgrading their ARM technology. ARM enters the second half of 2011 with a healthy order backlog and a robust opportunity pipeline, which are expected to deliver strong performance in license revenues. Relevant data for the second quarter, being the shipment period for ARM's Q3 royalties, points to a small sequential increase in industry-wide revenues.
Strong revenue growth
The rapid growth of smart phones and the introduction of mobile computers, such as tablets, continue to benefit ARM. Total dollar revenues in Q2 2011 were $190.2 m; up 27% compared to the same period last year. Excluding the catch-up royalty payment of $9m in Q2 2010, total dollar revenues were up 35% year-on-year in Q2 2011. For the first half of 2011 total dollar revenues were up by 22% to $375.7m compared to the first half in 2010. Profit before tax was up by 22.5% to $54.4m in Q2 2011 compared to $44.4m in the same quarter last year. In respect to the strong earnings ARM declared a 20% increase on its interim dividend to 1.39p.
Technical Outlook
On the daily chart, ARM is making a higher low above 463.0p indicating a positive trend is forming in the stock. Momentum oscillator MACD is negative and 12 day EMA has crossed above 26 day EMA supporting the positive trend forming in the stock. 14 day RSI has crossed above 50 indicating the development of a positive momentum in the stock. Both the indicators are making higher lows with a rising stock price also supporting the positive trend. 14 day positive DMI is below 14 day negative DMI, while 14 day ADX is near 26 indicating the stock is forming a bottom above 463.0p. The stock also crossed above 20 and 50 day EMA supporting the positive trend. It has support near 500.0p and resistance near 633.0p.
Trading strategy
Stock can be bought near 532.0p with a profit target of 597.0p and stop loss of 505.0p.
Stocks Update
Amec PLC
On the daily chart, Amec hit the stop loss of 883.0p indicating a negative trend in the stock. MACD is negative and 12 day EMA is below 26 day EMA also indicating a negative trend. 14 day RSI has crossed above 30 suggesting the stock is oversold. 14 day positive DMI is below 14 day negative DMI, while 14 day ADX is near 41 indicating a downtrend in the stock price. All positions should be closed for the stock.
Stagecoach Group PLC
On the daily chart, Stagecoach is in a positive trend with higher lows and is trading above 20 day EMA. MACD has turned positive and 12 day EMA is above 26 day EMA, indicating a positive trend in the stock. 14 day RSI is above 60 showing strength in the uptrend. 14 day positive DMI has crossed above 14 day negative, while 14 day ADX is near 23 indicating a positive trend in the stock above 204.0p. The stock should be a hold with the same profit target 265.4p and a stop loss of 223.5p.
Imperial Tobacco Group PLC
On the daily chart, Imperial is trading at an entry point of 2015.0p indicating a small movement in the stock. MACD is negative and 12 day EMA is below 26 day EMA, indicating the stock is still forming a bottom above 1918.0p. 14 day RSI is below 50 showing weakness in the positive trend. 14 day positive DMI is below 14 day negative, while 14 day ADX is near 21 indicating a consolidation in the stock above 1900.0p. The stock has support near 1900.0p and resistance near 2150.0p. The stock should be a hold with the same profit target 2220.0p and a stop loss of 1940.0p
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 April to 30th June 2011:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
54.55% |
12 |
| Hold |
0 |
0 |
| Sell |
45.45% |
10 |
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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