Investment Notes
By CUSTOS
THE equity market, having broken through a new high level, is churning away in active dealings unable to decide whether to ignore the October election and go •through the high pal reached in May, 1961, before the Selwyn Lloyd deflation (which was only about 5 per cent above the present level). There are so many good cool pany reports to come that it may well do s° Great things are expected next month of MARK' AND SPENCER and COURTAULDS—tWO leader which could set the market spinning upwarel
again. But I advise caution, I think the market is more likely to boil over and to come back sharply when the good reports are out. The gilt-edged market seems to have overdone its bearishness. It never seems to appreciate that a high `borrow- ing requirement' for the below-the-line capital expenditure is not in itself an inflationary risk. There is no reason to suppose that savings will ' not match the investment. With the longs' now yielding 6 per cent and the 'undated' 61 per cent, this is surely discounting another-and un- necessary-rise in Bank rate.
Pressed Steel into BMC
The motor boom has enabled BMC nearly lc double its trading surplus for 'half time'-£13 million against £7 million. The apparent profit per vehicle has risen by about 50 per cent. This is very satisfactory and should point to an in- crease in the final dividend, although the interim has been unchanged at 71 per cent. At 18s. the shares yield 6.3 per cent on the old dividend of 20 per cent. The motor boom has also enabled PRESSED STEEL to announce a sharp re- covery in profits-£1.4 million against a loss of £2.5 million. This was thanks to its flourishing motor-body business, for the domestic-appliance factory at Swansea continued to make a loss. The Swansea plant is now being closed down, but the liquid position of the company remains very strained and it was somewhat surprising that the final dividend was stepped up from 5 per cent to 20 per cent (the same rate as BMC). I sug- gest that this might be a good opportunity to exchange froni Pressed Steel into BMC, even with a difference in price of is. Cope Allman The developments in COPE ALLMAN, to which 1 referred briefly the other week, have now been announced. It has, acquired the UK and Euro- pean rights to a Canadian process for anodising aluminium strip in a continuous operation. Be- sides producing anodised aluminium, it will also build the manufacturing units for sale through- out the world, including the US. This is a highly important development and an order for £500,000 of plant has already been received. The com- pany has also been acquiring some smaller com- panies in the UK for cash and shares. Vendor selling may account for the fact that Cope All- man shares have not responded to the excellent report. The 1963 profits of £1 million against an equivalent annual rate of £572,000 showed an advance of no less than 75 per cent. The dividend has been raised to 271 per cent against the 25 per cent forecast at the time of the one-for-three rights issue last year. Earnings work out at 574 per cent. Cope Allman, which made its name in the manufacture of lipstick holders and then went into aerosol sprays and other precision en- gineering, is obviously extending its range of enterprise under the forward management of its chairman and managing director, Mr. Matchan. At the present price of 31s. 6d. xd, to yield 4.3 per cent on dividends and over 8 per cent on earnings, the shares seem an attractive in- dustrial investment.
Viyella International
The directors expect a substantial advance in profitability this year and next when the benefits of group integration after the recent acquisitions begin to be realised. This is the fast- growing company in which ICI has an interest and its recent report declared profits up by 50 per cent, the dividend up from 9.1 per cent to 15 per cent (covered 1.7 times), a one-for-one scrip issue and a forecast of not less. than 124 per cent on the enlarged capital. Estimates of combined earnings indicate that, at 37s. 6d., VIYELLA are probably on a prospective dividend yield of 3.3 per cent and an earnings yield of 6 per cent. The shares have come up from 21s. 9d. this year and now look high as compared with Courtaulds or ICI.
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