At the risk ( f wearying readers with the merits of Union- Castle Mail Steamship Li ordinaries as a lock-up speculation in the shipping market, I feel I must go over the position once again in the light of the 1937 accounts and the chair- man's speech. Last year this company, as I anticipated, made rather bigger profits than in 1936, but decided, as all but the most optimistic had been fully prepared for, to conserve its cash resources. Thus, although as much as 151 per cent. was earned on the ordinary capital, no ordinary dividend was paid and the shares have merely hung fire around 14s. 9d. At this price, giving an earnings yield of over 20 per cent., they seem to me to be the outstanding bargain among shipping equities. The company has now made substantial progress with its policy of fleet modernisa- tion which, when complete, will provide South Africa with shipping facilities second to none of their kind in the world.
It is true that the permanent financing of this ambitious programme has yet to be arranged, but it should present no great trouble. If the ordinary shares move over par, as is by no means an impossibility, during the next few months, the board would probably choose to raise a slice of the money by a new issue at par ; if markets remain dull, conditions will favour an offer of low-cost debentures. In either -event, therefore, the company should be able to fund its floating indebtedness on economical terms. Con- sistently with the completion of this programme, the board should be able to resume ordinary dividends this year, as Mr. Robertson .Gibb intimated at the meeting. My guess is that for a start the . company will not pay more than 5 per cent., but even so a buyer at todays' price has a prospective dividend yield of over 61 per cent. on his outlay. The shares are worth putting away for their prospective income return and the chance of a rise in price. CUSTOs.