Investment Notes
By CUSTOS
THis week being the last of a three-week account the equity share markets have been taking a knock. The good company reports have been forgotten (e.g., Gus and THORN) and the bad ones have been receiving more attention (WELLMAN SMITH and WESTINGHOUSE BRAKE). To make matters worse, a 'huge 'bull' position had been built up in BURMAH OIL just when the Chinese appeared en masse on the Indian fron- tier. The shares have tumbled from 64s. 6d. to 62s. A correspondent writes that for seven years there had been no capital annr;ciation 00
his shareholding of Burmah. Now at last, when the stage is set fair for capital appreciation, the Political risks frustrate it. The truth is that the India-Pakistan business of Burmah will always be a political risk. But when these risks 'are quiescent, Burmah should reach 70s. When the Political risks are clamant the shares will be down to 60s. In other words they have become a good Jobbing medium.
Phi/Jo-Copying Nlachines
•• Some interesting calculations were made in the Investors' Chronicle recently of the earnings 'which the RANI: • ORGANISM ION might expect from its subsidiary Rank-Xerox, the manufacturers of the 914 electrostatic .photo-.copying machine and itS &vcloping brother. Apparently the president of the American,Xerox had stated that 'foreign operations show the kind of exciting potentiality Which warrants emphasis. It appears that by ,1965-66 the American Xerox earnings from its overseas .subsidiaries might reach $2, a share. Assuming that the American parent shares 50:50 with the •Rmilt Organisation in the .Rank-Xerox earnings up to the first £1 million and thereafter takes two-thirds, it would appear that by 1965-67 the Rank Organisation might be-getting as much as 4s. 4d. gross per 5s. share .fr.om Rank-Xerox. At the moment the Rank Or- ganisationis paying 25 per cent out of earnings of just over 50, per cent and the 'A' shares yield 3, per cent on dividends and a little over 6 per cent on earnings,
qtahd
.1 here is another company which makes a high-speed electro-photographic copier, operating
similar principles to the •Zerox 914 copier. Allis is oz.m..in,, which is the largest company
the, country making document-copying Ilttper ,. and. equipment. In May, J9625, this Fompany acquired Block and Anderson and AXtended its activities to accounting and cal- Nating equipment, .1'he 1962 results, showed slight setback in profits, but the di'vidend was Rcv,ertheless increased by a point to 18 per cent, .1thich .showed some confidence in the prospects Op .1963. The shares have come hack to 24s. 6d. agoinst a high. last year of 34s. 9d. and at this P,Fice the yield is 3.6 per cent on dividends and "found 6 per cent on earnings.
London Rubber
It is extraordinary how sonic companies keep their market value although there are plenty of grounds for scepticism. LONDON ROBBER is a case rn point. Its record has been exceptionally good, Which may account for the fact that at the price of -29s. 9d. for the 2s. shares the yield is only 21 per 'cent' on dividends arid 51 per cent on eartrungs. As the name implies, the company Makes rubber goods and has subsidiaries in toy and advertising balloons, wine and spirit stores, glues and .adhesives, house gloves and baby Pants. 'I quote from a broker's circular: 'The advent of oral contraceptives has again had no adverse effect on the company's sales of tradi= tional products. However, London Rubber is in a „position to market its own oral product "Pc.ritinor" if, as and when it seems appro- priate.' This incites me as an investor to sales resistance. Another 'bull' point in this broker's circular is the establishment of an Indian sub- sidiary which is erecting a factory at Madras for the manufacture of contraceptives. To quote: 'Development in India has been held up by religious and moral objections. However, with the Government attitude now clarified, London Rubber can begin to tap the market potential in that country.' The outlook for the company,
it is said, remains bright, with sales in the first three 'months showing a useful improvement. But, as with contraception, discretion is the better part of valour in this investment.
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