Compariy Notes ,
By CUSTOS
THE gilt-edged market has forged strongly ahead on talk of cheaper money to which my colleague drew attention last week. The market was short of stock and the rises in the undated stocks, which he had specially recommended, were as steep as a point or more in the day. Industrial equities were also selectively strong. WIGGINS TEAPE which I advised buying last week at 67s. 6d. rose to 80s. 6d. on the declaration of a two-for-three bonus issue. They are still a comparatively cheap leader in the paper- making group. There was great excitement in the hire-purchase companies on the announcement that Government restrictions on hire-purchase deposits and repayment periods had been lifted. This helps the distributors of TV and radio sets, refriger- ators and vacuum cleaners who run their own hire-purchase companies and, of course, the makers of these articles as well. It will also assist THE TIMES FURNISHING (HOLDINGS) COMPANY whose 5s. shares have not risen much since I recommended them in April at 22s. 6d. At 25s. to yield 5 per cent. they are difficult to buy but well worth trying as there may be another bonus in addition to an increase in dividend. The restriction on the issue of capital by the hire-purchase finance companies still remains, so that UNITED DOMINIONS TRUST, MERCANTILE CREDIT and BOWMAKERS are not greatly helped by this Government concession, but this did not stop a general marking up of their equities. The market in these shares is very restricted and I see that I recom- mended them at considerably lower levels. But this is not the time to take profits—in view of the substantial increase in hire- purchase business in the past six months.
GESTETNER will declare their final dividend in September for the year ending next month and great interest will be taken in the decision seeing that in October last a bOnus of one- in-five was issued. The market expects that the previous year's rate of 20 per cent. will be maintained, if not bettered. Earnings were then the equivalent of 52 per cent. on the increased capital and in view of the prevailing boom in trade the current year's results should be considerably better than in 1952-53. The majority of duplicators exported from this country are manufactured by Gestetner and in spite of the recession in North America I would not be surprised to learn that its sales have forged ahead in both the United States and Canada. The Company is always forward with research and in the last two years has developed an entirely new range of duplicators and a new ' photoscope ' process of reproduction at competitive prices. At 20s. (middle price) the 5s. shares would yield 5 per cent. on the assumption that 20 per cent. will be main- tained and I regard this as an attractive yield for a share which may be ranked as the blue chip ' of its 'industry. Another bonus distribution is not impossible in view of the strength of the reserves.
THE soft idrinks industry in this country is highly competitive but SCHWEPPES maintains its leading position—in addition to its Schweppervescence ' range of mineral waters it markets Kia-Ora products—and is developing its overseas business in Australia, South Africa, East AfriCa, Hong Kong, Malta and the Continent. Under a recip- rocal arrangement with the American com- pany it has started to market Pepsi-Cola in this country while Pepsi-Cola markets Schweppes products on the eastern seaboard of thb United States. It is planned to extend its transatlantic interests to Canada and Mexico in the near future. Trading profits have expanded steadily since the war. In this country the output of soft drinks has risen in the past three years and should be larger again this year in view of the de- rationing of sugar. Schweppes should maintain its share of the bigger turnover.. In June last year it made a rights issue at 40s. and in August distributed a bonus issue of one-in-two. The dividends paid in 1953 were 4 per cent. on £1,000,000 and 81 per cent. on £1,950,000 alpital. The equivalent earnings on the larger capital were 21.6 per cent. The directors have stated that they should be able to maintain 121 per cent. but the interim to be declared later this month may give some indication whether more is likely to be paid. The shares are not exactly cheap at 56s. to yield £4 9s. per cent. but they might well be bought on any reaction.
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