Market report
CUSTOS
History was made by the share markets this week, the Financial Times index leaping to 392—a rise of 39 per cent from last Novem- ber's 'low' of 284. If you stand amazed at this performance during the worst stagnation British industry has endured at the hands of a deflat- ing government you must remember that the Stock Exchange usually discounts company prospects twelve months ahead. So, although some company reports will remain bad and perhaps get even worse, others will begin to show an encouraging turn, indicating that when reflation of demand comes profitability will be greatly improved. British Motor Holdings is a case in point. After a first half loss of £7.5 million the company is expected to break even in the second half and make a profit of £10 million next year, which might justify a dividend of 10 per cent. The 5s shares have moved up to 12s after a low of 9s 3d. cr. There has been hectic dealing in electrical shares after GEC's bid for AEL Shareholders of ast are rightly holding on, expecting better terms. The present price is 58s 3d. PARSONS and REYROLLE, which are indirectly concerned in AEI, have also moved up. At 49s Parsons look dear on a price-earnings ratio of 30, but Reyrolle at 59s, on a price-earnings ratio of 111, are still attracting buyers. Plessey rose sharply on the 15 per cent increase in profits and at 36s 3d x.d. yield 3.9 per cent, the price-earnings ratio being 18.3. if the company can negotiate fresh con- tracts with the GPO the shares will no do,ubt move higher.
In the mining market Selection Trust rose sharply by 6s to 99s in anticipation of favourable results from its drilling in the Kambalda nickel area of west Australia. This caused a sympathetic rise in Western Mining to 191s. It is fascinating to see the low yields now offered by the great mining houses —3.7 per cent on Anglo-American, 3.2 per cent on Charter. Consolidated, 3.3 per cent on Selection Trust and 2.8 per cent on Rio Tinto- Zinc. As one firm of brokers remarks, the equities of such sound growth companies are bound to rise in market value to return divi- dend yields more after the American fashion of between 2 per cent and 3 per cent, since demand is still in excess of supply.
Company notes
Viyella accompanied its half-time statement— ales steady, profits sharply down—with the arms of its disengagement from ICL The £10 nillion unsecured loan is to be repaid at par, I end ia's equity shares are being offered to the remaining Viyella shareholders by way of a rights issue. The funds needed to repay the loan will come from 'the company's own cash resources and normal bank facilities'; though the company still looks for a better second half when it will be more liquid and interest charges will be lower.
Among companies reporting, Felixstowe Dock announced that tonnage handled by the port had risen by 50 per cent—to 1,013,687 tons—since the previous financial year. The company benefits from the growth of container and roll-on-roll-off ferries to North European ports and from the North Sea gas boom. Staplegreen, with important interests in in- surance broking and Lloyd's underwriting, have come through an internal reorganisation with pre-tax profits just over £100,000 higher at £1,530,952. Mr Edward Hogg, the chairman, says that almost £1 million of the brokerage earnings was in foreign currency, two thirds of it us and Canadian dollars, and wonders why this dollar-earning business should have to pay £70,000 a year in SET.
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