Company Notes
By CUSTOS THE generally quiet time the Stock Exchange is having at the moment—to the great relief of the over-worked clerks—is not preventing some excitement in 'special situations.' Store shares provided a feature in NEW DAY FURNISHING to which I called attention last week at 22s. 6d. The rumour in the financial press is that GUS has made a bid of 30s. which the company has rejected. I have no information to confirm or deny that story: I thought that the shares were worth buying on dividend and earnings yields and the prospect of a good report in November. At 30s. the yields on last year's results would be 5 per cent, on dividends and 13 per cent. on earnings (excluding EPL.) This compares with earnings' yields of 5 per cent. and 4.6 per cent. respectively on the two leading store shares—MARKS AND SPENCER and WOOLWORTH. The only comparable earnings' yield among the leaders is 13 per cent. OR LEWIS' INVESTMENT TRUST. I must not compare a single retail furniture business like NEW DAY FURNISHING With the leading chain stores but I give these figures to support my idea that the shares were cheaply valued at 22s. 6d. and not unreason- ably at the present price of 26s. 3d.
1 • • • THE most exciting bidding of the week was heard in the market in hire-purchase finance shares on the removal of the Treasury ban OR their new issues. UNITED DOMINIONS TRUST rose from 137s. 6d. to 160s. at one time, closing at 150s., MERCANTILE CREDIT from 97s. 6d. to 103s. 9d. and BOWMAKER from 27s. to 28s. 3d. I first recommended MERCANTILE CREDIT in October last when they were 56s. and UNITED DOMINIONS TRUST in April when they were 98s. For 'growth' shares without undue risks I still think they are worth holding and buying in quiet periods when there are shares on offer. Now that the companies are able to make new issues of capital there will not be the same need to plough back profits for internal finance. In 1953 the leading finance companies were paying out in dividends only 37 per cent. of their earnings against 67 per cent. in 1946. Yet during this period the profits available for their equity share- holders rose from £170,000 to £1,014,000. THE scope for hire-purchase is constant I: growing with the rise in national productiot and consumption. It is estimated today tha hire-purchase accounts for 80 per cent. o all furniture sales, 50 per cent. of radii sets, 333 per cent. of television sets, 10 pe cent. of private motor cars and 20 per cent of commercial motor vehicles. No less that 62 per cent. of Gas Board sales of equipmcn are made on hire-purchase and 37 per cent of Electricity Board sales. Public Board are no doubt beyond Treasury instruction on consumer credit. While the large depart ment stores and mail order houses such a GUS arrange hire-purchase for furnitur and other consumer durable goods, th finance companies which I have been teem mending deal mainly with capital goods fo producers, facilitating the equipment c factories, laundries, hotels and caterin shops. The increase in this higher class c business has been remarkable. Mr. Gibso Jarvie stated that the volume of new busines discounted by United Dominions Trus last year rose by nearly 40 per cent. Branch
e have been set up in the Dominions whic will one day contribute handsomely to thi parent company's revenue. At the preser price of 73 United Dominions Trust share yield 10 per cent. on earnings and 3.4 pe cent. on dividends but a 'rights' issue clearly pending. Mercantile Credit als yield 10 per cent. on earnings and 3.9 pe cent. on dividends. Bowmaker 5s. share yield 113 per cent. on earnings and abox 3.1 per cent. on dividends. Present pria are perhaps discounting the immedial future.
THE professional gambling in the developir gold mines of the Orange Free State gathering pace. Leading the market PRESIDENT BRAND Which iS ROW 77s.—M01 than double its low price this year of 36s. 64 This is said to be the richest gold mine the world. We shall soon see how it d velops for it has started production and wi shortly announce its first month's prof This is one of seven new OFS mines beir developed by the Anglo-American grout the most important after President Brat being Free State Geduld, Western Holding President Steyn and Welkom.
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