Venturers' Corner
It is unusual in these days to find the shares of any company in the steel trade quoted well below their par value, but the current price of Sheffield Steel Products ordinary is only £24 per Doc nominal of stock, or just under 5s. in the £. The explanation is that this undertaking is not a producer, but a user of steel which it converts into a variety of products. Consequently, while steel producers have been thriving in boom-like conditions, Sheffield Steel Products has been faced with higher prices for its raw material and, in recent months, with actual difficulties in obtaining adequate supplies. Last year the company sold several of its subsidiary undertakings, thereby extricating itself from its heavy indebtedness to the banks, and the board embarked on a policy of concentrating all attention on the remaining plant, which has been brought thoroughly up to date.
Earnings for the year ended March 31st, 1937, were inevitably those of a transition period, but a small profit was made, against a loss in the preceding year. During the past four months further progress has been made, and I anticipate that by next spring the board may find it practicable to tidy up the balance- sheet, which contains intangible assets valued at £112,000. Obviously, the ordinary capital will have to be written down and some fresh working capital may become necessary, but both these factors seem to be amply discounted in the low price at which the ordinary stock is quoted. If the stock were written down to a nominal ,C5c, per £boo, which is twice today's quotation, the assets could be reduced by the substantial sum of £280,000 in the balance-sheet. At £24 Sheffield Steel ordinary is an interesting low-priced speculation. CUSTOS.
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