COMPANY NOTES
By CUSTOS
PRE" fresh. fall in the Treasury bill rate to
£4 I Is. per cent. and the continued .strength of sterling have kept the boom in the gilt-edged market on the boil. Tuesday was the. last day for dealing on the Stock Exchange" account. and profit-taking was in evidence. The industrial share market is certainly due for a period of con- solidation. The index has risen over 25 points from the November low of 1614 and it is unlikely that the pace of this advance will be maintained.
• Oil shares remain reactionary : a recovery can hardly be expected until there is better news ' from the Middle East. New issues are still piling up. The latest is from BOWATER-£15 million of 54 per cent. convertible unsecured loan stock 1978-82 at 974--the conversion rights being equivalent to 46s. 6d. for the ordinary in 1959, 48s. 9d. in 1960 and 54s. 3d. in 1961. The present • price- of the existing ordinary is around 45s. 9d. This makes a premium on the convertible loan • stock certain and judging by the ICI success this - issue will be heavily stagged.
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RANKS, after declaring a 100 per cent. free scrip bonus, are raising £61 million in a one-for-three rights issue at 14s. (against 17s. 6d. for the old) for the purpose of modernising their mills and extending their storage. Some investors may feel that conditions are still unsettled in the milling trade, although Ranks and SPILLERS have now settled their differences, and that Ranks will soon -be= Wanting to buy up more baktries., to secure their- retail outlet, which 'means A continued war with . Allied -Bakeries.. I am not so attracted by the 54 per cent. yield offered by Ranks and would sooner exchange into the more sheltered HOVIS- .MCDOUGAL-1: combination, previotOy • recom- mended; whose 5s. shares' at -12s. 6d. -offer a 54 per cent. yield.
* * On the grounds that a relaxation of the credit restrictions may be announced next April, the shares of the hire-purchase finance companies have been a rising market. These companies finance capital goods for industrialists as well as the hire-purchase departments of traders and have not been so badly hit by the restrictions as some of the stores dealing directly in consumer . durable goods, but they are anxiously waiting to see details of the Bill which is to be introduced 'to replace the existing emergency powers in respect of hire-purchase . . . and to regulate borrowing by hire-purchase finance companies.' Will there be further discrimination against their form of lending? It has been suggested that minimum cash ratios should be imposed-on the finance 'com- panies to protect the investor who lends money to the.smaller houses which advertise for funds in the daily press. If -the small mushroom companies suffer restraint it will probably be a boon to the old-established companies such as UNITED DOMINIONS TRUST, MERCANTILE CREDIT and OLDS DISCOUNT. I am , not suggesting an immediate purchase of • these shares but they should be watched for a buying opportunity. I particularly favour Mercantile Credit, which at 97s. yields 54 per cent. on the basis of the 274 'per cent,
• dividend .last- covered 24- times by earnings. The
-shares ,were• as-, high. as 125s. • last year., United Dominions -at 77s. 6d.. yield nearly 44 per cent.
- on the same dividend and much the same cover.. Olds Discount 5s. shares at 23s. yield 5.85 ,per cent. on 274 per cent, dividend, also .24'-times covered. Their 1956 'results will be out shorttye
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