Company Notes
By CUSTOS
THE old account on the Stock Exchange ended and the new began this week with such cheerfulness that one would have thought the railway crisis was a dream. The market seemed to be ignoring every- thing but the hopeful budget surplus, the reassuring gold return, the good news from Wall Street and the coming dividend season which it expects to be cheerful. But it can hardly hope to repeat its wonderful per- formance of 1954 when the Financial Times index of thirty leading industrial shares enjoyed an appreciation of 40 per cent. (from 131 to 184). Shares which scored more than a 100 per cent. advance (allowing for bonuses) were BOWATER PAPER (nearly 140 per cent.), FORD MOTOR (120 per cent.), GREAT UNIVERSAL STORES (117 per cent.), MARLEY TILE (186 per cent.), ODEON THEATRES (114 per cent.) and among Oils BRITISH PETROLEUM (150 per cent.) and BURMAH OIL (103 per .cent.). Among close runners-up were HAWKER SIDDELEY, ALBERT E. REED and MARKS & SPENCER—all nearly 90 per cent. In the, mining section RHODE- SIAN ANGLO-AMERICAN scored 90 per cent. and FREE STATE GEDULD no less than 115.
Last week I included oil shares in my select list of investment preferences for 1955 butJ did not expect them to boom so suddenly. SHELL have been 10s. higher at 129s., BRITISH PETROLEUM 8s. up at 86s. 9d. and Burmah Oil 14s. up at 134s. 6d. On December 24 I estimated the 1955 dividend for British Petroleum at 20 per cent, or 25 per cent. As the market seems to be con- fident of one or the other it would not be surprising to see the shares rise further. Burmah Oil I analysed on October 1. This company now holds 26,714,925 shares of British Petroleum and 2,428,800 shares of Shell valued at current market prices at over £130 millions. Add the net current assets of £154 millions from the 1953 con- solidated balance sheet, deduct the prefer- ence capital of £4 millions and the 'break- up' of the Burmah Oil equity capital of £20.6 millions becomes nearly £7 per share. This includes nothing for the fixed assets and the tra‘'..!. investments in India and Burma which last stood at £17 millions. It
is clear that the Glasgow managers of this company will have to face the disagreeable shock of carving up a gigantic melon. Why not distribute some of the British Petro- leum shares to their shareholders? Or fol- low the British Petroleum example of a four-for-one bonus? The last bonus was the miserly one of 50 per cent. in 1952.
* * *
Another strike of the African mine- workers for higher pay is holding up work in the Northern Rhodesian copper mines. This usually provides an opportunity of buying the shares of the leading mines, which virtually doubled last year in price, at a more reasonable level. On this occa- sion I would call attention to 'CHARTERED' (British South Africa Company) which draws its revenues from royalties paid by all the mining companies in Northern Rhodesia. For the year ending September, 1953, it earned 78 per cent. and paid 50 per cent. in dividends. At 104s. the 15s. shares return a dividend yield of 7.15 per cent. When the final dividend is paid next month in respect of the year to last September I would not be surprised to see not only an increase in distribution but a writing up of the nominal value of the shares to 20s. The outlook for the company is very promising. Its royalties vary with the price of copper but in spite of the freeing of the copper market the average price last year was only slightly lower at £249 per ton (against £256 in 1953). In view of the tightness of the supply of copper from North and South America, there is good reason to suppose that the world price of copper will rise rather than fall. The Northern Rhodesia copper belt is now the second largest pro- ducing area in the world. In the last eight years its output has doubled and in 1954 it amounted to about 400,000 tons. This was derived from the four established mines- Nchanga. Mufilira, Rhokana and Roan Antelope. There are two new mines whidh have still to be brought into production— Bancroft and Chibuluma. By 1958 the out- put is expected to be little short of 500,000 tons. The royalty revenues of 'Chartered' should therefore increase for many years.
Previous page
