COMPANY NOTES
By CUSTOS
DESPONDENCY again ruled in the
markets this week and even the gilt- \ edged market turned dull. The new convertible debentures, however, remain very firm and I cannot emphasise too strongly the attractions of this class of security at the present time. Oil shares have been weak again with the new SHELL dipping to 17s. 6d. premium at one time. Wall Street does not help this market and it is clear from the sharp drop in the dollar premium from around 8 per cent. to 4-per cent. that British investors are very bearish about the Wall Street outlook. Nevertheless, I find it strange that in spite of extremely bad business news Wall Street does not break into a big selling slide. What is making Americans less inclined to sell is perhaps the expectation that the Government will in the end agree to tax cuts in spite of its unbalanced Budget. * *
Industrial reports are not uniformly disappoint- ing by any means.' After the dismal GENERAL ELECTRIC warning the results of ENGLISH ELECTRIC for the year ending December were far better than the market anticipated. Group profits before depreciation and tax were actually 7 per cent. up and net profits after larger depreciation were also slightly higher. Allowing for the increased capital, earnings on the equity were 32 per cent. and the cover for the 14 per cent, dividend is just over 2i times. The aircraft interests must have come to the rescue of other branches, but the Marconi electronic companies are believed to have had a good year. The shares rose to 46s. 6d. and at this price return the satisfactory yield of nearly 6 per cent. LEYLAND MOTORS also report higher profits, the group profit before depreciation having risen by nearly 10 per cent., but heavier
depreciation and tax 'bring the net profit slightly down. The l21 per cent. dividend is un- changed and at 43s. 6d. the shares yield 5.7 per cent. For the moment there is nothing much 'to go for' in these shares. Nor in STEETLY, despite the 25 per cent. jump in profits and the raising of the dividend by 3 per cent. to 16 per cent. The shares at 68s. 6d. only yield 4i per cent. on the 3-j• times covered dividend. This company, making heat-resisting furnace linings, has bene- fited from the expansion of the steel industry. I am sorry to see the sharp drop in the surplus for LIEBIUS, the group profits having fallen by 20 per cent. The dividend of 11 per cent. tax free is main- tained, but the cover is now only 1.4 times on earnings. With the yield at 44s. 3d. nearly 9 per cent., these shares used to be a useful sweetener.
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In suggesting two weeks ago a combined pur- chase Of BANCROFT and CHARTERED as an averaging operation for distressed copper shareholders I had not seen the Chartered results for the year ending September last. Fortunately I was not too optimistic. The drop in net profits from £7 million to £4.8 million (following on the £100 fall in the price of copper) was no greater, and the cut in dividend from 35 per cent. to 30 per cent. was less than the market anticipated. Earnings were suf- ficient to cover the reduced dividend just about twice. At 43s. as against a high last year of 79s. 3d. the shares return a yield of nearly 101 per cent. without allowing for tax relief. As the outside investment income of the company is rising and will offset to some extent the further fall in royalty income the dividend might well be maintained this year, though the market is going for a small cut. The shares are not unattractive as a potential recovery stock.
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