FINANCE AND INVESTMENT
By CUSTOS
LIKE the war news the stock markets continue to hang fire. Holders steadfastly refuse to sell, while those with available funds remain content to stand on the side-lines and await events. It would not be surprising, in such circumstances, if jobbers seized the oppor- tunity to quote a lower range of prices. That the level of values, taken as a whole, shows practically no change is a striking indication of the strength of the technical position. While I cannot see the basis, for the moment, of any substantial rise, except on highly selective lines, it is just as difficult to imagine how there can be any serious fall. Weight of money is there to sustain values and, sooner or later, is likely to bring a fresh advance.
C.P.R. POSITION
It is a pity that companies with important news for shareholders cannot always frame their announcements in clear terms. Here we • have the Canadian Pacific Railway disclosing a working loss of over 3,000,000 dollars for August, a fall of 7,253,000 dollars compared with August, 1943, without any more detailed explanation than that recently effective wage increases were retroactive, that the retro- active part of the burden fell on the August figures and that sub- sequent months would have to bear only the current cost of the increases. It would need a first-class statistician to deduce the real position from such information and even he would have to ask for fuller data.
Now the news is vouchsafed that the wage increases date from September t, 1943. Since we had already been told that the total extra cost to the end of this year, would be 15,000,000 dollars, the monthly burden is 94o,000 dollars. To the end of August, 1944, the cost must have been II,28o,000 dollars, which makes the fall of 7,253,000 dollars for that month easily understandable. Still, I do not like doe trend. For the first eight months of 1944 net railway earnings have shown a fall of over 6,000,000 dollars compared with the corresponding period of last year and each month's figures must now shoulder a burden of 94o,000 dollars. Unless there is some move to adjust fares the declining trend must continue. Even at 141 dollars the 25 dollar ordinary shares, on the 2 p.c. dividend rate, do not look particularly promising.
i3RIMITIVA GAS PROSPECTS After a jump from ros. 6d. to 12s. Primitiva Holdings, the South American utility company, have fallen back to us. lid. Buying followed the announcement from Buenos Aires that the Argentine Government had decided to raise the amount payable for the ex- propriation of the Primitiva Gas Company, the Holdings, company's important subsidiary, from the equivalent of £230,000 to something close to Lt,000,000. That was good news in itself, but there has been some selling on the theory that it does not justify expectations of a break-up value of much more than 13s. to 15s. a share and that may be some way off. Unfortunately, it is not easy to work the position out, since the Primitiva Gas Company is only one of a number of investments held by the parent concern. My own view is that the upward revision from the devisory figure of £230,000 offered some months ago is important. A further adjustment seems probable to something nearer to the value of £5,000,000 at which the gas company is carried in the Holdings Company's books. At us. 'Id. the Li shares are worth retaining. A break-up value several shillings above this level seems probable.
ODEON THEATRES EXPANSION
Having increased its ordinary dividend from x5 per cent. to zo per cent. Odeon Theatres, the cinema combine, has exceeded expectations in showing an expansion in earnings, before taxation, from £1,885,084 to £2,197,049. Taxation has absorbed £1,693,506, against Li,4o4,243, leaving only a modest rise in net profit. Even_ so, the higher dividend has been consistent with the transfer ot L75,000, against nil, to general reserve, and with the allocation or £75,000, against £122,514. towards writing off preliminary expenses. This group, headed by Mr. J. Arthur Rank, is expanding rapidh., but at 37s. the 5s. ordinaries yield less than 3 per cent. on the 20 per cent. dividend. For the time being they look high enough, although the long-term prospects are good.
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