FINANCE AND INVESTMENT
By CUSTOS WHAT is most impressive in the stock markets is .not their activity but their latent strength. Superficially, it may appear , that speculative dealings are at present in excess of genuine investment business. That is far from the truth.. Even when the emphasis is on equities, as it has been in recent weeks, most of the buying is of a solid type. So far as the gilt-edged market is concerned, the present lull hides the basic fact of real strength underneath. I am not prepared, therefore, to join in the heresy hunt which is aimed against any sort of activity in the stock markets. Nor, apparently, is the Treasury. Instead of clamp- ing down on ,the rising market in equities, Whitehall has wisely decided to take advantage of favourable conditions by selling its shares in Harland and Wolff, the Belfast shipbuilding concern.
After being held " privately " for many years the 5,200,00o " A " kr shares are now being passed on to the investing public, including, of course, the trust companies, through the medium of a leading firm of stockbrokers. Naturally the Stock Exchange is pleased at this official use of its facilities, quite apart from the pecuniary benefit derived from increased turnover. As for the shares themselves, Harland and Wolff " A" at 17s.
seem to me a reasonably-priced investment. On the 6 per cent. dividend the yield is 7 per cent. The shares should be worth holding for a modest rise.
CUNARD WHITE STAR POSSIBILITIES
Now that the ices has been broken one wonders whether the Treasury may not see fit a little later to sanction the marketing of its holding in Cunard White Star. Of this company's Do,000,000 of capital, Cunard Steam Ship, the parent concern in which the public is directly interested as investors, holds . 64 per cent. The balance is in the hands of the British Trea- sury, the Government of Northern Ireland and the O.S.N. Realisation Company. Like Harland and Wolff, Cunard White Star has staged a big recovery in recent years and can now lay claim to a really strong financial position. Now that it has started dividend payments with 5 per cent. for 1941, the shares are obviously approaching the stage at which they could be sold at a respectable price. Who would be the buyer-Cunard Steam Ship or the investing public-I do not pretend to know.
One important consequence of such a sale would be the liqui- dation of the OS.N. Realisation .Company, and that, in turn, would- mean a substantial payment to the R.M. Realisation Com- - pany. Just how much would go to R.M. would depend on the price realised for the Cunard White Star shares, .but I should be surprised if it meant less than 3s. 6d. per -R.M. share. Allow- ing for R.M.'s holding of .Anglo-Foreign Properties, the price of 7s. at which R.M. Li shares are now quoted is not excessive.
ANGLO - IRAN IAN SURPRISE
After the preliminary statement which showed-net profits, after tax, only slightly lower at £2,841,909 for 1940, against £2,986,358 for 1939, the full accounts of Anglo-Iranian Oil sprang a still greater surprise. They show that trading profits, struck after providing for royalties and taxation paid to the Iranian Govern- ment—for obvious reasons the amount is not disclosed—were £911,613 higher last year at £5,747,440. Thus, in spite of war handicaps, the -company did well, an achievement which I imagine must be related to a fall in stocks from £2,427,567 to Li,696,773. Unfortunately, from the stockholders' standpoint, tax has called for over Li,000,000 more than in 1939 at £2,975,156, so that the available balance was rather lower. In the circum- stances the board has obviously acted wisely in holding the divi- dend at 5 per cent. Yielding less than 21 per cent. Anglo- Iranian Li ordinary units look very fully priced at 43s., but they are worth holding. There will be fluctuations reflecting the ebb and flow of events in the Middle East, but the company's finances are -strong and the long-term prospects good.
ODEON THEATRES RECOVERY
Like the Gaumont-British Odeon Theatres has achieved a -sharp recovery -in earnings. For the year to June 21 operating profits rose from L342,631 to £467,567, but greatly-increased pro- visions for income-tax and for War Damage Act contributions have precluded the resumption of. ordinary dividends. Trading is now fairly good and, blitz permitting, I should expect a further substantial rise in earnings this year. The 5s. ordinaries, at 7s. 3d., although they offer no income yield, are worth holding.
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