Account gamble
Good haul
John Bull
Last week Aberdeen witnessed an invasion of North Sea oil men. They were largely trying to sell their wares and size out the competition in the huge emerging supply industry. Now by recent statements, it would seem that British companies are doing much more in the North Sea than might be imagined. They are falling over themselves for work. Certainly investors have not been slow off the mark either. All this is one reason why my attention was recently turned to British Ropes.
Yet there are other reasons Why I should recommend British Ropes whose full year profit statement is due in early April.
Last May the chairman of British Ropes, Mr Harry Smith, indicated that the group's profits would be slightly better than those of 1971. However, by September this forecast was down-graded with the exception of lower profits than those of £5.3m made in the previous year. The blame was put on depressed market conditions both at home and abroad.
Now I should imagine that towards the end of last year activity began to perk-up. This was certainly the case with another wire rope manufacturer, Bruntons (Musselburgh). which announced record profits last week. The improved economy at home and the increase in mining activity overseas should be factors behind such a revival in demand. Now another event that should benefit British Ropes should be the deal with the British Steel Corporation. By a complicated package arrangement British Ropes will get 20 per cent in a new joint company with the BSC. Also British Ropes gets £3.5m cash — an important point in these days of high interest rates.
The shares have slipped back this year to near their low point of 87p. This gives a splendid buying opportunity; at this level even if profits do come back from the 1971 level to a figure of about £4.8m then the PE ratio is still only 13i and the yield is 5.2 per cent. But as I have indicated this estimate could be far too conservative.
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