Investment Notes
By CUSTOS
e ECOND thoughts on the Budget have damped down enthusiasm on the Stock Exchange. It is probably true to say that most institutional investors are not yet willing to be fully invested in equity shares. The depressing report of BMC —a 'severe setback' in earnings for the first thirty-two weeks as a result mainly of strikes-- stopped the recovery in the consumer durable groups, but speculative investors, taking more than a six months' view, have been picking up BMC shares at their lower level of around 15s. 6d. to yield 61 per cent. If the more con- servative want to take an interest in a motor trade recovery they cannot do better than buy JOHN SUMMERS shares at 49s. 6d. to yield 6 per cent. This company produces the sheet steel for motor-cars, refrigerators and other consumer durable goods and did well to report only an 8 per cent. fall in its trading profits for 1960-61. Profits for the first four months of the current year are stated to be similar to those of the corresponding period of the previous year. This was one of the five shares I recommended last week. One of them—WALL PAPER MANUFACTURING —had a sharp rise on the rumour that ICI were making a bid, but this was denied by the com- pany. Bids apart, the present price of the shares —24s. to yield over 3.3 per cent.—is in my opinion fully justified.
Property Shares
Property companies escaped the Budget attacks which had been feared and the shares have made a good recovery. Of the conservative investment companies 1 like BERKELEY PROPERTY, which has a Hambro as chairman. This company has half its portfolio in residential properties, mainly in London, and half in office, shop and factory premises. Nearly one-third of its portfolio is in Canadian office and flat properties. An increase in dividends for 1962 is foreshadowed and on the basis of 10 per cent. the 5s. shares at 15s. 3d. yield 3.2 per cent. By 1966 it is calculated that earnings will have increased by 60 per cent. and dividends will have doubled. Sr. MARTINS LE GRAND is more speculative, being concerned with big developments in offices and flats in London, but its earnings and dividends could rise by over 50 per cent. in five years' time. At 32s. the 5s. shares yield 21 per cent. on the esti- mated 15 per cent. dividend. A newcomer is KENNEDY LEIGH, which is going to develop the huge estate between Victoria Station and the Embankment. The 5s. shares were introduced last year, and at 9s. 9d. return 3.2 per cent. on the estimated 61 per cent. dividend.
Lines and the Common Market
Some companies have not waited upon our slow entry into the Common Market. For ex- ample, LINES BROTHERS, the leading firm of toy makers, has carried out a big expansion scheme in Europe—a new factory at Calais and neW showrooms in Brussels, Amsterdam and Frank- furt. A 75 per cent. interest has been acquired' in a German toy firm—Schwanek of Bavaria. The company recently made a 'rights' issue of one-for-four at 27s. 6d. and forecast satis• factory profits for the current year. At the present price of 44s. the shares offer yield of 3 per cent. on the forecast dividend of Is. 4d.
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