Chesnara PLC

Chesnara PLC (LON: CSN) is a FTSE All-Share index listed European life and pensions consolidator that operates in the UK, Sweden, and the Netherlands.

The interim results for H1 FY22 are expected to be announced on 31 August 2022.

Investment Rationale for Valuation – WATCH at GBX 290.00

• Completion of Acquisition: On 28 April 2022, CSN completed the acquisition of both Sanlam Life & Pensions UK Limited and Robein Leven NV, for a consideration of £39 million and £13 million, respectively.
• Limited Growth Prospects: During FY21, the net insurance premium declined compared to FY20. However, it maintained decent profitability on the back of solid investment returns. Nevertheless, the stock is moving in the tight range with limited upside potential from the current levels. Also, the ongoing tension between Russia-Ukraine, and associated sanctions can keep the market volatile in the short-term.
• Technical Standpoint: CSN’s stock price is hovering between the middle and the upper Bollinger Band, while it is trading below the 20-day EMA (GBX 290.23). On the weekly chart, CSN stock prices are trading in a symmetrical triangle pattern and hovering near the upward band of the pattern, which is acting as a psychological resistance. Moreover, the momentum oscillator RSI (14-period) is showing the reading of ~52.15 level and showing the negative sign. However, the prices are trading above the trend-following indicators 21- period SMA, which may act as crucial support zone. A breakout above the upper band of the triangle pattern will add the more bullishness in the prices.  An important support level for the stock, is placed at GBX 265 while the key resistance level is placed at GBX 320.
• Macroeconomic Risk: The equity markets are likely to remain jittery over rising interest rates, the strongest U.S. dollar in two decades, concerns over inflation and possible recession.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Conclusion

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Based on the limited upside potential, overstretched prices, and uncertain macro conditions, we have given a “WATCH” recommendation on Chesnara PLC at the closing market price of GBX 290.00 (as of 1 June 2022).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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