Hot tips
John Bull
An earlier punt in Valor, the heating group, paid off handsomely. Profits were very good as I had estimated and the shares appreciated by 10 per cent over my recommended price.
This success (and noting that Skinflint fancies the heating industry, from last week's note on Dimplex) gives me encouragement to gamble on a short-term rise in the shares of United Gas Industries whose results are due at the beginning of December.
For UGI, as the name implies is also in the heating businens through its activities in the manufacture of gas meters and household heating appliances as well as precision engineering.
My expectations are for a good increase in interim profits to September 30 and further comment about the stake Hanson Trust acquired in UGI last month. In the first instance, after making £1.1 million pre-tax in 1971, last time UGI profits were £1.4 million, though without the miners' strike the result would have been near the £2 million mark. The backbone of this achievement was the performance of the domestic electric and gas appliance divisions; sales rose from £7.7 million to £9.3 million and profits from £597,000 to £948,000.
As for prospects for this current period UG1's chairman Colonel George Raby has forecast improved results and he says 1973-74 will be better still. It will, of course, be remembered that UGI has undergone considerable reorganisation over the last twelve months or so — the benefits of which could be slow to work through to profits.
The firm has recenty lstreamlined its operations, selling off various interests and moving certain manufacturing plant. One affect of the realisations has been to Improve greatly. UGI's cash position. In the last balance sheet it had £1.2 million. cash against borrowings of £653,000. This will help finance expansion of its product range.
As for the Hanson purchase of 14.7 per cent of the equity, the story behind this was that US Rockwell decide to sell its holding and Hanson, flush with cash from a rights issue, bought the UGI stake — as an investment. However I certainly would not rule out a merger with another Hanson-linked group, BDH, which is about the same size as UGI.
There is plenty for the speculator to go for.
First dealing Last dealing Nov 13 Nov 24 Nov 27 Dec 8 Dec 11 Dec 28 Account day Dec 5 Dec Jan 9
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