COMPANY NOTES
BY CUSTOS BUSINESS on the Stock Exchange dwindled this week, partly because of the approach of the Christmas holiday, partly because of preparation for the £40 million convertible debenture issue of the ICI on January 2, partly because the news from the Middle East was not encouraging. The rise in the electrical-power shares spilled over. The selling of ENGLISH ELECTRIC just because it was not among the first three groups to receive contracts for the building of atomic power stations seemed to me overdone. Everyone knows that negotiations for a fourth nuclear power station are going on with a group in which ENGLISH ELECTRIC, BABCOCK AND WILCOX and TAYLOR WOOD- ROW are the main partners. At 46s. 3d. to yield 5.4 per cent. on the 124 per cent. dividend covered 2.7 times English Electric are not unattractive and I would discount the story that another issue of capital is imminent. The shares of the successful electrical-power tenderers have risen rather too sharply and with the exception of GEC the yields are not tempting to many investors. Perhaps the unpopular motor group has more immediate possibilities. On the news of a three-day week to avoid mass redundancy FORD MOTOR have been sold down to 28s. at which price they yield 5.3 per cent. on the 74 per cent. dividend which was last covered no fewer than 5.8 times. Incidentally RALEIGH INDUSTRIES which, in contrast with the motor industry, reported 'record sales of its bicycles at home and for export, is now `ex' the increased final divi- dend at 38s. 3d. to yield 7 per cent.
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Steel shares were supported when it was 'first heard that steel prices were to be in- creased on the average by 6 per cent.—to cover the increase in costs prior to the Suez crisis—but there was no follow-through. The latest steel reports were mixed- DORMAN LONG profits were down but those of COLVILLES and STEWARTS AND LLOYDS were up—the last by over 20 per cent. At 62s. 9d. the shares of Stewarts and Lloyds seem particularly interesting for they are `cum' the final dividend and a one-for-one scrip issue—the first split or bonus to be announced by a denationalised steel corn* pany. The earnings last year amounted to 143 per cent. (against 117 per cent.) which were sufficient to cover the 174 per cent. dividend eight times. The increase in turn- over was due mainly to heavy sales of steel tubes to the oil industry (up 176 per cent.): the exports of spun iron pipes and castings were also up 29 per cent. and the profits of the overseas subsidiaries were 13 per cent. higher. The certain expansion of the oil industry ensures the future prosperity. of the company. At 62s. 9d. the shares veil, 5.55 per cent, on dividends and nearly 4? per cent, on earnings. In the split form It is reasonable to look for an increase• in dividend from 84 per cent. to 10 per cent. (as happened in the similar case of }moat; SIDDELEY), so that the potential yield would be over 6.3 per cent. If the shares had not been denationalised at 35s. or if the market, did not fear another 'rights' issue out of the new increase in the authorised capital, they would be standing much higher in the market today.
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In the year to September last the trading profits of APEX (TRINIDAD) OILFIELDS de,', dined by about 124 per cent. as a result of the rise in wages and other costs, but the net profit was down by only 9 per ceht; and thanks to the very strong financial position the dividend was raised for the year from 334 per cent, to 35 per cent. tax- free covered by earnings of 56 per cent. At 39s. 'ex' dividend of 30 per cent. the 5s. shares yield 7.7 per cent. gross. This seems to be a good moment for making A Purchase for, in the current year, the com- pany will be getting the benefit of the higher US Gulf oil prices which form the basis of its dollar sales contracts. Apex Is One of the few British companies which Bain directly from the Suez Canal stop- Page; it would also gain indirectly , from devaluation, if that should ever come.
METAL BOX hai always figured in my list 91 'blue chip' equities, but I am excluding It from immediate purchases. The company (4 just declared the same interim dividend k4 Per cent.) and reports an increase of 15 Per cent. in sales for the September half- rear. Profit margins are, however, declin- 1,08 and more competition is being met. There does not seem much prospect now of anY increase in the total dividend above 10 Per cent., so that even at the lower price 01 45s, (to yield 4.3 per cent.) the shares are not yet attractive.
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