FINANCE AND INVESTMENT
By CUSTOS To buy now or wait until the election result is known—that is the problem confronting investors. Unfortunately, it is quite impossible to offer really convincing advice indicating a definite course of action. All that can usefully be done is to outline the possibilities and put the general position in some sort of perspective. To the investor who is confident of a Conservative victory the temptation to back his political judgement and buy now must be very strong. Prices are already creeping up, and unless there should be a sudden and at the moment unforeseeable change in the public's estimate of the election result there may well be a further fairly substantial improvement before the final figures are announced.
What if expectations are falsified and Mr. Churchill is defeated or fails to secure a working majority? In my view such a surprise, especially after a Conservative victory had been at least partially discounted, would bring a sharp relapse. That is why investors who do not feel sanguine about a Churchill victory should hold back. Unless they are prepared to gamble on the election result, they have every reason to maintain a reasonably liquid position and post- pone purchases until the result is known. If the Conservative optimism proves to be well founded markets will undoubtedly respond briskly, but there should still be plenty of shares available on attractive terms for the genuine investor.
CABLE AND WIRELESS POSITION
Although there was some falling-off in the gross receipts of the operating company of the Cable and Wireless group last year, the effect on net revenue was cushioned by a reduction in the E.P.T. charge. In 1943 E.P.T. called for £2,000,000. Last year it required only £1,513,000, a reduction of £487,000. In consequence, although the gross revenue of Cable and Wireless Limited fell from £10,201,375 to £9,648,414, net profit was practically unchanged at £1,237,757. Cable and Wireless (Holding), in which the investing public is directly interested, depends very largely for its income on the results of the operating company which come into the Holding company's accounts through investments held in the old cable undertakings. Last year the Holding company's gross income was practically unchanged, and the dividend on the Ordinary stock has been comfortably maintained at 4 per cent.
With a reduction in E.P.T. more than a possibility in the reason- ably near future, the £roo Ordinary stock, standing around £94 and yielding about 4.1 per cent., looks a good holding ill the light of the post-war prospects. Although gross receipts may not keep up .to the inflated war-time level, net earnings, after tax, might easily in- crease. Internally the combine has carried out drastic reforms during the past ten years, and Sir Edward Wilshaw makes it plain that he has confidence in the well-established policy of progressive lowering of rates. It is not sufficient, however, in assessing the company's stocks, to think in terms of the continued operation of the combine under private ownership. Discussions are taking place regarding the future of Imperial communications as a whole and it may well be that the outcome will be some new system of public corporations. With a break-up value very substantially above par. Cable and Wireless Ordinary stock should have little to fear from any change in the status of the company.
BURMAH OIL PROSPECT
While there is nothing in the chairman's statement to warrant expectations of any early increase in dividends, stockholders in the Burmah Oil Company can view the outlook with considerable con- fidence. It appears that at their original cost the assets employed in Burma on production and refining were worth some £40,000,000. while replacement at today's prices would involve a considerably larger sum. Since these assets were denied to the Japanese on the express instructions of the British Government, the company has strong case for full compensation. Meantinie the I2f per cent dividend on the Ordinary stock is being covered by earnings outside Burma and some, at least, of these sources of income seem likely to yield more in the early post-war years. Quoted around 85s. to yield just over 3 per cent., without allowing for Dominion tax relief. Burmah Li units should prove a worth-while lock-up investment
Previous page
