Company. Notes
By CUSTOS
THE stock markets have regained a somewhat unsteady balance and remain highly sensitive and selective. The gilt-edged market was at first stimulated by the success of the Govern- ment's conversion operation but is still disturbed by idle talk of dearer money. The most active market is in South African gold shares, where the OFS developing mines are once again rising in anticipation of good quarterly reports next month. The political risks attaching to the election of Mr. Strydom as Premier seems to have been ' largely discounted, if that is possible. SHELL TRANSPORT pleased most professionals (if not all) by declaring the same interim dividend of 5 per cent. tax free on the enlarged capital. This confirms the expectation that 15 per cent, tax free will be paid for the year, which will allow a yield of 41 per cent. gross at the present price of 119s. Some optimists believe that more will be paid by the Royal Dutch Shell group—if only to justify the high price of ROYAL DUTCH on Wall Street.
Stranger things have happened. • The market was surprised by the increase in earnings and dividend of GUINNESS, but disappointed by BASS, which is paying the same. The statistics suggest that the decline in beer consumption is slowing down, if it has not come to a stop, while the profits of brewery companies reporting in the first nine months of the year disclose an average increase of around 20 per cent. This is no doubt mainly due to the lower cost of barley, though some companies can also claim a greater efficiency in operation. In the case of Guinness earnings at 331 per cent, have increased by 32 per cent. and the dividend is raised from 18 per cent. to 23 per cent. The shares advanc6d from 39s. to 42s. to give a yield of 51 per cent. This seems reasonable and very useful for the investor in search of income. But for capital appre- ciation few investors could have been luckier than those who bought SCOTTISH BREWERS when I recommended them a year ago—on November 27, 1953. They were then 53s. 6d. and as I write they are quoted at 103s. 9d. A sudden demand this week caught the market short of shares and the price rose suddenly by 7s. The yield at 103s. 9d, on last year's dividend of 18 per cent. is under 2i per cent, but with earnings of' 102 per cent, the earnings' yield is nearly 20 per cent., which still satisfies my strict investment Clearly, the market is going for a boll. The interim dividend for the year end April, 1955, will be declared next moil As the company cannot expand as much it has in the past few years the foray!, holders should be prepared sooner or Is to take part of their handsme profit.
The loss for the second year sustained by SINGER MOTORS is a Nino., that competition is becoming more severe:, the motor industry and that when the girj are spending millions on new plant some'', the small or weaker companies are b01111d be hit badly in the end. Indeed, some of „tieti big groups like awns may eventually 1„ the pinch. I feel sure, however, that t: giant BRITISH MOTOR CORPORATION Will r able to hold its own against the III competition of FORDS and GENERAL MOT,°,1 (through Vauxhall). The highly etl1c1P; Austin factory at Birmingham can teach CY'', the Americans something in mechanisatio or automation as it is called. The 11,117,,, gramme of rationalisation and standardl"; tion which followed on the Austin-Moll merger may now be regarded as comple.t4 although the full fruits of the ecorionl,", made may not yet have been seen in BMC trading accounts. The next stage,4 one of,expansion of output and to final'', et this it is proposed to issue new 5s. share4 8s. in the proportion of one for ten. I!`do will raise over £.4 millions. By next W."; le output is planned th increase by 25 per cell; to 10,000 cars a week and to 15,000 alit Lt week in another eighteen months. This4 more than 50 per cent, higher than t" 4 present output. Last year output Ka 27 per cent. and profits by 25 per cent, to that shareholders can look forward increasingly good results. The divideflo (for the year to July 31) was raised fl:o 101 per cent. to 121 per cent. out of eartc°; on 49 per cent. The shares have come l'"io —on the announcement of the increase capital—to 1 Is. from 12s. 3d. not OA months ago and at this level a divicle"ao yield of 51 per cent, is obtained and 4, earnings' yield (ex-EPL) of 26 per CC,, A switch from ROOTES yielding only 4,0554 cent., would be justified—or a straw purchase.
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