COMPANY NOTES
By CUSTOS
AFTER their very sharp advance there was good reason why the 46 security markets should come back . a little on profit taking and consoli- date their gains. The rise in the gilt-edged market, which had been stimulated by the fall in the Treasury bill rate to £3 18s. 9d. per cent. (the lowest for two years), was halted by the launching of another loan—£111 million for East Africa High Commission in n per cent, stock 1977-83. Profit-taking in industrial equities was well absorbed in spite of the mixed appearance of some company reports. ICI reported a drop of ' 8 per cent. in net profits after an increase of 5.8 per cent. in the turnover. The ratio of gross trading profits to turnover was down from 18.7, per cent. to 17.6 per cent. The 'no change' in the 10 per cent. dividend was expected. A small rise in net profits was repored by UNITED DRAPERY and a large one (22 per cent.) by UNITED MOLASSES. The increase of 171 per cent. in the net profits of BRITISH PETROLEUM, in spite of Suez, was regarded as very satisfactory and the absence of any increase in the dividend (15 per cent, tax free) was no great disappointment. Earnings on the BP equity now amount to 52 per cent., cover- ing the dividend 11. times. Oil shares improved sharply on the better news from the Middle East. I still think that an exchange from BP at 146s. 3d. to yield 3.55 per cent, into BURMAH OIL at 105s. to yield 3.8 per cent. if the dividend is raised to 20 per cent. will prove profitable. The 'bulls' in the oil share market tend to rush from share to share and their latest favourite is CANADIAN EAGLE, Which has an 81 per cent. stake in the newly dis- covered Mene Grande oil field in _Venezuela, Which is a discovery of major importance. The year's report and dividend will be announced next week and the market is going for a further in- crease in the dividend. At 73s. for the registered shares the yield is only 3 per cent. on the old divi- dend, so, unless the announcement is very good, what is known as a `stale bull' position will be seen in these shares.
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