INVESTMENT NOTES
By CUSTOS
Tr-r HE markets are all marking time before the Budget—except the South African shares, which are falling sharply every day. The holder of gold shares should exercise patience and not try to jettison his investment immediately. In time the South African national will buy his shares because he has no option otherwise. The migration of capital back to London cannot be carried out overnight. Elsewhere the undertone is firm except in the tobacco share market, where there is fear of higher taxation. Bank and hire-purchase finance shareholders do not appear to be worried, and brewery share buyers are confident that they will not be hurt. The 1959 report of IMPERIAL CHEMICAL INDUS- ! RIES fully endorsed the status of this share as the leader in the eqUity markets. Total sales were 10 per cent. up at £509 million and the consoli- dated gross income was no less than 64 per cent. tip at £73 million—in spite of a higher deprecia- tion charge and a larger bonus for employees under the profit-sharing scheme. What is still more impressive is that profit margins were higher in the last half of the year than in the first, rising from 20} per cent. to 214 per cent. (against 15.3 per cent. in the last half of 1958). Equity earnings have increased from 13.7 per cent. to 24.6 per cent. and the dividend has been raised from the notional 8 per cent. to 114 per cent. Only a few optimists were expecting 12 per cent. All this is a brilliant achievement and fully justifies the rise in the price of the shares to 62s. 6d. to yield 3.6 per cent. The dividend being covered nearly 24 times, the earnings yield is about 8 per cent.
Brown Bayley
The BROWN BAYLEY group is somewhat of a speciality in the steel share market. The company is a holding one with a 50 per cent. interest in Brown Bayley Steels and a 60 per cent. interest in Hoffmann Manufacturing, both of which have done remarkably well last year. Profits in the first rose by 20 per cent., and in the second by 42 per cent., and dividends were raised in each ease, with a one-for-one scrip bonus from the second. The parent has raised its own dividend from 11 per cent. to 12 per cent., which is covered five times by consolidated profits. At 65s. the parent shares yield 3.7 per cent. and at 28s. 3d. the steel subsidiary--Brown Bayley Steel—yields 4.8 per cent. with about 14 per cent. on earnings. This is a group which seems well worth holding.
Cheap New Issue
METROPOLITAN RAILWAY COUNTRY ESTATES iS a property developer with the problem of a scarcity of suitable land, but last year it made two acquisitions—Paignton and District Land and Development and the Fleetwood Estate—which provided ample reserves of land for sonic time to come. To tinance this the company made 3 rights issue of 10s. shares at 20s. on the basis o three for five, and these now stand at 3s. 6d premium. The directors hope to pay 121 per cent. and the new shares will be bntitled to the six months' dividend at that rate. in respect of the year ending in October. This Would allow a yield of 51 per cent„ which is good for an old- established property company.
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