Account Gamble
Up, up and away
John Bull
High technology is treated on the stock market with more than usual caution. It is all very well for a group to be run by a team of engineers or scientists but too often they neglect the financial aspects of running a business. One only has to reflect on the collapse of Rolls-Royce to realise the pitfalls to which I am referring.
This may be why Flight Refuelling has perhaps rather a lowly rating. However, there are both long-and short-term attractions. First it has a solid, if pedestrian record and, secondly, noting from the way Hawker Siddeley shares have appreciated following the Chinese Trident orders, I feel a group such as Flight Refuelling will be viewed more optimistically. Also the Government is not sparing the pennies on the Concorde project and, as a major supplier of aircraft accessories, Flight Refuelling looks well placed. Stockbrokers Argenti, Hope have indicated that Concord orders would, in fact, add £200,000 a year to profits.
I have stressed the importance of such a project such as Concorde, since the aircraft accessories side accounted for the bulk of profits. Other activities are in defence and electronic equipment.
As for the short-term attractions. I believe that the figures for the six months to June 30 will show an encouraging improvement over this comparable period. The general improvement in the economic climate should have helped and in his last report the chairman Mr J. Cobham, said that the size of the order book was satisfactory and forward forecasts presented a progressively encouraging picture. He added that turnover and profits would continue to improve.
The marketability of the shares has recently been improved by a one-for-one scrip issue and I expect keen interest in the results. Apart from Hawker Siddeley's share advance in this sector Daniel Doncaster, another beneficiary from the Concorde project, has performed well. This points encouragingly at Flight Refuelling whose interim results are due on November 29. The shares currently stand at 54p, selling at about 12i times last year's earnings.
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