Company Notes
By CUSTOS
THERE is little sign now left of the over- speculation which weakened the stock markets but I would still advise against buying of CANADIAN AND ENGLISH STORES and Gus where, I fear, an 'over-bright' position must remain. By contrast MARKS AND SPENCER 5s. 'A' shares, the investment leader of the store share market, has been forced up 9s. by strong buying to the record price of 69s. This was associated with a report in a national paper that sur- veyors have been called in to re-value the properties and that another 100 per cent. bonus is in sight. It is even rumoured that Sir Simon Marks has been frightened by the activities of Mr. Clore and sees danger in having an undervalued share in a public market. This surely is absurd for the Marks, Seiff and Israel families must hold a majority of the voting shares which could not be upset by Mr. Clore and Mr. Woolfson combined.
• • •
THE industrial share markets generally have been firm. The interim dividend of 4 per cent. declared by IMPERIAL CHEMICAL IN- DUSTRIES on the doubled capital pleased even the optimists, for it indicated a total of 10 per cent, for the year (against the equivalent 7/ per cent.) At a shade under 40s. ICI shares must be regarded as one of the cheapest 'growth' stock on offer. EAST- WOODS also stimulated the market by paying the same dividend 171 per cent. on a capital increased by a 50 per cent. bonus. At 67s. 3d. to yield 5.15 per cent. these shares are attractive. If dividends to be declared this autumn continue to exceed market expectations, industrial equity shares are bound for higher levels.
• • • THE recovery in oil shares calls attention once again to BURMAH OIL. Next week there will be considerable interest in this company's interim dividend, for the chairman stated in July that they intended to increase it in order to spread the shareholders' income more evenly. In 1953 the interim was 21 per cent. followed by a final of 15 per cent., out of earnings of 271 per cent. Dividend yield is not, of course, this share's particular attraction, being only 31 per cent. at the
present price of nearly £5. It is the capital reserve which investors find more compelling. The company holds 5,342,985 shares of Anglo-Iranian and 2,428,800 shares of Shell Transport. At current prices of 161 and 51 respectively these holdings are worth nearly £100 millions. Add the net current assets of £151 millions from the 1953 consolidated balance sheet, deduct the preference capital of £4 million and you will find that the 'break-up' for the equity capital of £20.6 million is £5 8s. per share. This makes no allowance for the fixed assets and the trade investments which stood in the last balance sheet at nearly £17 millions. In Glasgow, where this company is managed, they must like buying something for nothing. As the company's oil business in India and Pakistan is doing well and as its investment income from Anglo-Iranian and Shell will be higher this year it is reasonable to suppose that the total distribution will be increased although the usual statement that the increased interim does not imply such a miracle will undoubtedly be issued. Per- sonally I would go for a total of 20 per cent, at least and be content to wait patiently for the next capital distribution. The last one was 50 per cent, in August, 1952. It is a pity that the company does not attract the attentions of Mr. Clore who would quickly disinter these huge capital reserves.
• As I swear by the Aga cooker I am biased in favour of ALLIED IRONFOUNDERS one of whose subsidiaries is Aga Heat, Ltd. But this company which makes baths and other iron goods for the building trades must be enjoying another very prosperous year. It makes up its accounts to March 31 and for 1953/54 it earned 51.3 per cent. and paid 221 per cent. In June it declared a 100 per cent. bonus and the interim dividend due to be declared in November may well be rather more than half the previous year's 71 per cent. I would not be surprised at 5 per cent. followed by a final of 10 per cent. At 44s. the shares would return a potential yield of 61 per cent. if my surmise is correct, but discounting my optimistic bias the shares would not be dear to yield £5.12 per cent. on dividends of 121 per cent, which is the least I would expect.
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