Company Notes
By CUSTOS THERE was quite a shake-out in the last few days of the long Easter account and the equity market is all the better for it. For a short time it was possible to buy good invest- ment shares on a more reasonable basis but by Thursday of this week prices had recov- ered again, except in gold shares. SHELL came back momentarily from 113s. to 109s. cum the bonus of one-in-five, and I hope that some investors took advantage to buy. The shares are now 113s. 6d. In the next account the final dividend, payable on the old capital, is due to be declared and the general expectation is 10 per cent, tax free, making 15 per cent. tax free for the year. However, in view of the lead which Shell won over its competitors with its petrol "additive," which caused its sales in the United States to rise 37 per cent., and much more, I am told, in this country, some optimists are expecting a final of 121 per cent. Looking ahead this year it is not unreasonable to expect 15 per cent. tax free to be paid on the increased capital which would mean that Shell's can be bought today on a potential yield basis of about 51 per cent, on dividends and 271 per cent. on 1952 earnings. It is clear that Shell's will have to rise further before they are valued on the same investment basis as our other leading industrials.
• BEER consumption may decline but not WHITBREAD'S. This brewery's shares have been strong on the unexpected bonus of one new share for every two and a final dividend of 151 per cent. which will be paid on new and old shares alike. This is equivalent to giving the old shareholders 31i per cent. against 25 per cent, in the previous year. The shares have risen 10s. to 108s. 6d. and if the company pays the equivalent of 21 per cent, on the increased capital for 1954 the shares at this price would return a yield of over 6 per cent. However, as profits rose last year by over 40 per cent., I would expect the Company to pay at least 221 per cent., affording a yield of nearly 61 per cent. I recommended these shares in November when they were 88s. as the outstanding London brewery with a go-ahead manage- ment and an expanding export as well as home trade. I still regard them as an attrac- tive investment, • S.• THE impression is growing that GUS is becoming a dangerous 'shard. 'In Ivy -opinion a' share about which. news is' 'Constantly "leaking" is always dangerous, but if the rumour of a 40 per cert. to 50 per cent. increase in net trading profits for the Year ended last month proves to be correct the present price of the shares can nrobablY justified as discounting a doubled dividenn and another bonus. But I warn investors t° watch their step. If they still want an intet. est in the prosperous furniture trade theY might consider the 5s. shares of THE TIMO FURNISHING (HOLDINGS) COMPANY Which caters more for the middle classes, both in furniture and in tailoring through its sub' sidiary Willerby's. Its equity earnings for the year ending last December increased bY nearly a fifth to 80 per cent: out of which tt paid the usual dividend of 25 per cent. At 22s. 6d. the shares therefore yield 51 Per cent. This might be considered rather loW but, first, it is reported that trading turn' over in the first three months of the current year is higher than a year ago, secondly, bonus is usually given and this year it was one new share for every eleven, capitalising £50,000 of the unappropriated profits reservo of £300,000. There is also a general reserl, of £400,000 and I understand that the fixen assets of £430,000 are worth at least doubte,. at market value. With an equity capital 0I,„ £600,000 out of a total capitalisation £1,235,000 there is scope for further bonuses( in future years. Incidentally the amount 0 stocks out under hire purchase agreements at December 31st was £2,122,000, which' only £1.7 per £1 nominal capital. The cornes' ponding figure in the case of GUS is £5,3' Tins brings me to the hire-purchase finance companies which supply industry—rather, than the consumer—with capital equipme0` on the instalment system. The leader of Ilns industrial finance business is UNITE DOMINIONS TRUST whose £1 shares at 98,e; return a yield of £4 8s. percent. on divideneP of 221 per cent, out of earnings of 60 Per cent. Next IS MERCANTILE CREDIT Wil°1 shares I recommended in October wile': they were 56s. They are now quoted 72s. 6d. to yield £5 8s. per cent, on dividenas of 20 per cent.- out of earnings of 521 Pert cent. Both can be purchased as excellee,, "growth" stocks. As industry expands, sv will the turnover of these hire-purchase finance companies. If industry recedes, tti,e, restrictions at present imposed on In' capital issues of the hire-purchase corm panics should be relaxed. In other words: the investor -participates in the industria: boom and has a hedge against •an- industrial recession.
Previous page
