FINANCE AND INVESTMENT
By CUSTOS
MARKETS have recovered their poise but not their punch. While the weaker speculative positions have been eliminated and the selling from the main body of investors has dried up, investors with funds have not yet made up their minds that prices are right or which stocks are cheap. In consequence, markets are in an indeterminate phase, turnover is small and price fluctuations are narrow. There should be buying opportunities within the next few weeks for long- headed investors.
AN O.F.S. DEAL
In the Kaffir market even the Orange Free State, latterly a name to conjure with, has temporarily lost its appeal to speculators. Here we have East Rand Consolidated announcing the acquisition of interests in this field, whereupon the 5s. shares have fallen from 16s. to 14s. 3d. True, there had been so much whispering of the news in advance that when the official circular was released there was a pretty substantial speculative position built up. The significant fact, nevertheless, is that the publication of the full details, which show that East Rand Consolidated has acquired participations in interests held by several leading Kaffir houses, failed completely to bring in fresh buyers. Whether the new interests will prove worth- while time alone will show. If one assumes that the 120,000 shares paid by E.R.C. have been valued for the purposes of the deal around the current market price, the purchase price was about k300,000. That needs to be considered in relation to the company's other assets worth about £2,3oo,000 and to the present market capitalisation of E.R.C. of something over £4,000,000.
MONTAGUE BURTON PROBLEMS After falling sharply from 14s. 9d. to 13s. 6d., the los. ordinary shares of Montague Burton, the multiple tailors, have recovered to 143. following the directors' preliminary statement of profits and dividend. It is not hard to understand why net profits for the year to March 31st have slumped from £335,6o0 to £160,487, both figures being struck before providing for taxation. This company has been badly hit by the call-up in the age groups in which the great majority of its customers were to be found. In consequence of the fall in profits, holders of the £2,229,163 of ordinary capital are not to receive any dividend for the year to March 31st, against 5 per cent, in each of the three preceding years. This announcement came as an un- pleasant surprise to the Stock Exchange, but disappointment was tempered by the board's decision to pay an interim of 21- per cent. on account of the year ending March 31st, 1944. This declaration, which points to a total distribution of at least 5 per cent., clearly implies that the difficulties responsible for the heavy fall in earnings last year have now been surmounted. It is believed that by entering new fields, such as the manufacture of officers' uniforms, the manage- ment has already succeeded in restoring earning power to a satis- factory level. At 14s. the ios. ordinaries are offering a yield of less than 4 per cent. on the 5 per cent. dividend, but in view of the post- war improvement possibilities the shares should be worth keeping.
GOLD FIELDS POSITION
From the latest accounts of Consolidated Gold Fields of South Africa it is clear that the increase in dividend from to per cent. to 12} per cent. has been made possible by the profits derived from share market transactions. In his survey Mr. H. C. Porter explains that the increase in profits from £842,949 to £978,425 reported by New Consolidated Gold Fields, the operating concern, was due entirely to greater opportunities offered for profitable share trans- actions and that the revenue from dividends, interest and other sources was slightly lower than in the preceding year. From the capital standpoint the position is strong in that the market value of investments is substantially above the book figure. There has also been a further improvement in the liquid position, current assets, including gilt-edged stocks, amounting to nearly L2,500,000. This Kaffir finance house is interested mainly in the South African gold- mining industry, but has important interests in West Africa. At L3 the Lz shares are priced to yield just over 4 per cent.
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