FINANCE AND INVESTMENT
By CUSTOS
QUIET markets were to be expected after the holiday break and although the optimists profess to some disappointment at the volume of business, I see no reason for surprise or alarm. Admittedly, there are signs here and there of a gradual transition from sellers' to buyers' markets which may be expected to find its reflection later on in published profits, but I do not share the view of those who are looking for a contraction of trade and a more or Jess severe fall in prices in the near future. Shortages are .likely to remain the rule rather than the exception in most branches of industry for a long time ahead and meantime the scarcity of investments will keep security values high. Within the next three months holders of about £15o,000,000 of Argentine railway stockholders will be paid out in cash and be faced with re-investment problems. I look for the maintenance of a firm undertone in markets during the summer.
COURT LINE DEVELOPMENTS
For some time past rumour has been busy with the possibility of important developments affecting the Court Line. In some quarters it was suggested that following the sale of Lamport and Holt in 1944 the tonnage of Court Line, which also operates on South American routes, might be bought up by another shipping group. In the event, however, actual developments take the form of a pro- posal by the directors to distribute surplus cash and to leave share- holders with a holding in the operating subsidiary, United British Steamship. It may cause some surprise that the Court Line board should have decided not to employ the substantial liquid resources at their disposal in buying or hiring additional tonnage, but they make their reasons clear in stating that the present cost of ships is abnor- mally high and that delivery can only be secured a long way ahead.
Following the official announcement Court Line 6s. 8d. Ordinary shares have fallen back from 46s. 3d. to 43s. 3d., an adjustment to the board's estimate of what the shares of United British Steamship, the operating company, are worth. In reviewing the position the directors point out that on these is. shares a 50 per cent. di*Iend was paid for the year to June 30th, 1946, and although they forecast that considerably better results will be shown for the year to June 30th, 1947, they express the view that a reasonable valuation would be about 14s. As the surplus cash to be distributed amounts to 27s., that brings up the combined total to 41s. for each Court Line share. On top of that, however, there is a further £31,249 at the company's credit on Government Tonnage Replacement Account and Reserve for Taxation is stated to be "probably in excess of requirements." At the current price of 43s. for Court Line the United British Is. shares are therefore valued approximately at the directors' estimate. This will, I think, prove to be very conservative, since the paid-up capital is only £78,750, while the company owns a fleet of nine steamships and two modern motor vessels. The average age of the fleet is about fifteen years and the ships stand in the books at about £4 a ton deadweight. In present conditions earnings from such vessels should be very satisfactory indeed and the medium-term out- look for shipping profits looks distinctly favourable. I suggest, therefore, that Court Line, around a present price of 435. 3d., with 27s. to be paid back in cash in the near future, should prove a worth- while shipping investment.
MOTOR DEALERS' SHARES
A few months ago the Is. Ordinary shares of Braid Brothers, motor dealers and distributors and general engineers, were introduced to the Stock Exchange at a price around 2S. They have now moved up to 3s. 3d., but still appear to have considerable scope for improvement. The business is old established and is carried on principally in North Wales, Cheshire, Staffordshire and the Birmingham area, holding main agencies for principal motor-car manufacturers. During the war the group was engaged on munition work, but it has now resumed its normal activities. Last week the directors announced an interim dividend of 7+ per cent, on account of the year ending September 30th and in their statement to shareholders disclosed that the results achieved for the first half of the financial year had exceeded expectations, despite the fuel shortage and adverse weather. They added that results for the second half of the year could be expected to be better than in the first. This seems to imply that a total distribution of 20 per cent, is a reasonable expectation. On that basis the shares would offer a buyer at today's price a yield of some- thing over 6 per cent., which would be generous on the equity of a progressive business now operating in extremely favourable con- ditions.
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