Portfolio
Carpets International
Nephew Wilde
I had always believed that French was the official diplomatic language but I had no idea that French was also the international commercial linguo. It was, therefore, to my surprise to see reported' that the prime motive for the Slater Walker-Hill Samuel takeover was to establish a banque d'affaires. If there was no word to describe the intended merger in English then it was just as well it proved abortive.
As a shareholder myself I feel far more involved with the dealings of the big boys of finance. I now follow the large acquisitions with much keener interest, for instance. And one situation that has caught my attention recently is the attempt of AW (Securities) and Nottingham Manufacturing to acquire Lancaster Carpets. Whoever loses is going to be busy hunting around for another company in this industry. And these two bidders are not the only companies on the
lookout tor a carpet acquisition., Courtaulds, too, is active on thel scene. Now hopefully someone will appreciate the attractions of Carpets International; but purely for fundamental reasons I am prepared to make an investment in this company. For this £23m capitalised group is selling at little more than nine times last earnings and I am expecting to see an improvement in profits this year. There is also the incentive of a 5.4 per cent yield (with the dividend covered 2.7 times) to consider.
One of the reasons I am told that Carpets International is so lowly rated is because there are fears of a slowdown in consumer durable spending by the end of this year. Be this as it may, the group is still only achieving now the full benefits of rationalisation. Also Carpets International has a high overseas business both from export sales and in Australia where its manufacturing company accounts for about a fifth of the market.
So there are good reasons to believe that this will prove a rewarding share and if a takeover does emerge, 1 note that Carpets International's net asset value is nearly the same as the current price; In order to finance this purchase I am selling Eastern Produce and Hoover — both shares that have performed well.
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