Miner not helped by Middle East unrest

By Graeme Dickson
Updated: 12:24 EDT, 23 February 2011

Kazakhmys (KAZ) the copper, base metals and precious metals miner based in Kazakhstan, encountered a dead cross yesterday.

The company is not alone: Chilean copper miner Antofagasta (ANTO) gave the same signal yesterday in which the 20 day exponential moving average passed down through the 50 day exponential moving average:

Naturally, the sharp fall in the copper price, not helped by the Middle East turbulence, will act negatively against sentiment and profits, albeit the incredibly low costs of production should bode well for the Kazakh miner.

Fundamentally, the company trades on sound metrics with a forecast price to earnings ratio expected to come in at 7.8 times for 2011 and 2012 while its net gearing of 11 per cent is too low to be of any concern.

However, what might be of some concern is that its chairman Vladimir Kim sold more than a quarter of his shares in Kazakhmys to the state-owned National Welfare Fund Samruk-Kazynaor, reducing his interest from 38.9 per cent to 27.9 per cent, realising about US $1.3 billion (£803 million) in the process.

Mr Kim is also planning to offload a further four per cent to facilitate a possible additional listing on the Hong Kong stock exchange.

Mr Kim is not alone in offloading shares: David Munro, a fellow director sold 37,000 shares at 1565p.

Long term the prospects still look good but given the sales and the falling copper price, perhaps a temporary lid has been put on the share price progression circa 1650p while support should kick in at 1200-1250p, or a possible re-union with its 200-week exponential moving average which currently sits at 1140p. Update

Mitchells & Butler (MAB)- 330.8p – the stock closed at 330.3p. Sit tight for now but if it closes above 360p look to throw the towel in: otherwise aim for a price objective of 290p.

Go-Ahead Group (GOG) – suggested to sell at 1269p, the stock closed above the stop of 1365p and should therefore be closed.

Rank (RNK) – suggested as a sell at 126.5p – the stock closed at 126p yesterday: keep the stop based on a close above 140p – the company will announce its preliminary report also on Friday and it should be at the top-end of expectations. Much of this is in the price: what should be of concern is how the company will forecast for its new financial year.

Debenhams (DEB) – suggested as a sell at 67.15p, the stock closed yesterday at 61.9p. Lower the stop to 65.5p as the stock is struggling to break through the 20 day exponential moving average.

Intertek (ITRK) – suggested to sell at 1799p, the shares closed at 1794p. The downtrend is just about intact so hold for now but lower the stop to 1860p.

Randgold Resources (RRS) – suggested to sell at 5770, the shares successfully hit the trailing stop of 5211p and should now be closed.

The writer does not hold any shares or derivatives in the above mentioned companies. The material for this report comes from Sharescope.