Road Transport Shares
When the Labour government came into office investors were nervous of road transport shares in view of the threat of nationalisation, and the leader of this grOUp-TRANSPORT DEVELOPMENT- fell to 10s. 3d. These 5s. shares have now re- covered to 14s. 3d. Thanks to brilliant manage- ment, the directors have been able to carry out an expansion in rapport with the Government's policy for railways and roads. It is surprising to read that more than 70 per cent of inland goods traffic is carried by road and the National Plan virtually underwrites the further extension of road transport. Transport Development has been cashing in on this extension and has been taking over several companies in the industry. The latest was LONDON AND COASTAL OIL WHARVES. It has also been extending in Australia and Western Europe. The group has been able to increase its profit margins, earnings on net capital rising from 23f per cent to 28 per cent. It will, unfortunately, lose the benefit of investment allowances and both earnings and cash flow will suffer, but the current year will have excellent results, seeing that in the first half profits rose by 32 per cent and turnover by 21 per cent. Last year there was a 20 per cent scrip issue and, on the adjusted dividend, the yield at 14s. 3d. is only 3.9 per cent. However, the market ex- pects the dividend to be maintained on the in- creased capital, which would bring the yield up to 41 per cent. A possible exchange would be into COAST LINES, a company benefiting from the domestic traffic growth but retaining free depre- ciation for its ships and the new investment grants of 20 per cent. At 52s. 9d. the shares yield 5.6 per cent on the 15 per cent dividend twice covered by earnings.
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