FINANCE AND INVESTMENT
By CUSTOS
BUYERS are .in such superior strength that something approaching famine conditions are developing in some sections of the stock markets. It is still possible, of course, to deal freely in gilt-edged and most of the leading industrials, but first-class debentures and preferences and out-of-the-way recovery shares are another matter. Every jobber now has his waiting-list of buyers, and it is often a question of days or weeks before he is able to offer any shares. Let nobody think there is a buying scramble ; there is nothing of the kind, nor is the motive behind the buying any acute fears Of inflation. It is simply that long-headed people see the recovery chances and holders are unwilling to sell.
THAMES HAVEN OIL RECOVERY
Recent buying of the preference and ordinary shares of London and Thames Haven Oil Wharves finds some justification in the board's decision to pay a half-year's dividend on account of the preference arrears. The Li cumulative redeemable 4 per cent. shares, standing at 12S., still have moderate scope for improvement. Accounts now issued for 1040 and 1941, the first since the capital reorganisation plan put through in July, 1940, show that wharf profits rose from £133,909 to £165,618 in 1940, but, for reasons "outside the company's control," fell sharply to £100,207 in 1941, As taxation called for substantially more, at £52,466, last year, (Continued on page 250)
FINANCE AND INVESTMENT
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net profit was down from £65,594 to a mere £6,929. Fortunately, there has been an improvement in trading results during the first seven months of the current year, and this has prompted the board's preference dividend decision. The company is still heavily indebted to bankers, but is gradually strengthening its position.
ENGINEERING PROFITS AND YIELDS
Even in these days when engineering companies are fully employed, and, for the most part, increasing their output capacity, one comes across some very uneven trading results. This week, W. H. Dorman, the Stafford oil engine makers, report record trading profits and the maintenance of the 16f per cent, ordinary dividend, while Vaughan Bros. (Drop Forgings) are cutting their dividend from 221 to 20 per cent, following a reduction in profits, before tax, from £145,850 to £85,433. This surprisingly heavy fall was clue, it seems, to the abnormally high level of profits in the preceding year and to "certain increases in direct costs of production which have not been passed on to customers." On the 20 per cent. dividend, Vaughan 55. ordinary shares at 12s. 6d. yield 8 per cent. On the other hand, a return of over Rs per cent, can be had on W. H. Dorman tos preferences, which carry a non-cumulative dividend of ix per cent These shares, at los. 3d., are under-valued. Another engineering concern, engaged mainly on the constructional side of the industry, which has again done well is the Wellman, Smith, Owen Engineering Corporation. Trading profits for the year to March 315t rose to a new record level of £83,498, net profit, after tax, was slightly higher at £36,914 against £35,219, and for the fourth successive year ordinary shareholders get 12+ per cent. At 25s. the £r shares yield to per cent., a generous return which seems to me to make adequate allowance for post-war uncertainties.
RECOVERY SHARE!.
As so many investors are now recovery-minded, I propose to give details each week, so far as space allows, of depressed shares with chances of capital appreciation. In'the light of the accounts for the year to March 31st and the post-war outlook, the £x cumulative 7 per cent. preferences of G. H. Downing, the roofing tile manu- facturers, seem to come into the recovery category. Profits- before depreciation rose from £8,590 to £25,690, a debit on profit and loss account of £4,014 has been converted into a credit of £21,676, bank overdraft has been paid off, and cash and gilt-edged appear at £28,841. Dividends are in arrears since June, 1939, but there seems to be a prospect of an early resumption of payments. The shares are quoted around 15s.
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