The Investment Column: Bloomsbury is only a hold despite birth of new heroes

Possibility of a bid means Antofagasta is still worth buying; Cornwell Management reassures its investors
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The Independent Online

After eight years of domination by the schoolboy wizard, the company is now proving it can keep growing without the Harry Potter spell. The Half-Blood Prince came out in July, after the period of these latest results.

Some 12 per cent of Bloomsbury's sales now come from the US and Germany. Translating and publishing its works itself in Germany quadruples the margins it could previously achieve through using third-party licensees.

The success of J K Rowling and Ms Clarke shows Bloomsbury can spot successful new authors. The group is also prudent enough to buy up the back catalogue and future rights to established authors such as Joanna Trollope and Michael Ondaatje.

Further balancing of its portfolio comes from the range of award-winning children's writers and a bank of solid, repeat edition reference titles such as Who's Who and Black's Medical Dictionary.

The Harry Potter effect is still an important factor in deciding whether to invest in Bloomsbury shares, of course. The sixth instalment beat all records, so group profits will leap by 21 per cent this year, compared with annual growth of only 6 per cent in 2004, when no Potter volume was released.

The next chapter will be Harry's last but he will provide bankable earnings for the group in perpetuity.

The group's overseas expansion and strong roster of authors and titles will help Bloomsbury's profits grow when the final chapter of Harry Potter's exploits has come and gone. But at 357p, shares in the company appear to be fully valued on 18 times earnings. New readers shouldn't start here. Only a hold.

Possibility of a bid means Antofagasta is still worth buying

Antofagasta, which mines copper in Chile, is finding that it costs less than nothing to get the metal out the ground. Sort of. Wages are going up and the cost of fuel to run the mines is going up, but there is a by-product to copper mining called molybdenum (a metal used in the production of stainless steel) whose price has jumped 293 per cent in a year. Sales of molybdenum more than offset the costs of mining the copper.

And that's just one half of the good news behind Antofagasta's superb interim results yesterday. The copper price, too, has been sent soaring by demand from China, India and the economically healthy West, and averaged 21 per cent higher than during the same period a year ago. So Antofagasta's revenues rose 49 per cent despite cuts in production at its ageing mines, and profits were up 78 per cent.

There is only enough copper stockpiled around the world to satisfy three days' demand, so the price is not coming down in a hurry. That should offset the worries that investors voiced yesterday over the need for Antofagasta to invest in its mines to improve production quality and quantities from now on.

Antofagasta has been our pick of the mining sector this year and is up 31 per cent so far. The recent death of its chairman, Andronico Luksic, the head of the family which owns 65 per cent, might make it vulnerable to a bid. Keep buying.

Cornwell Management reassures its investors

Little Cornwell Management Consulting was set up in 1991 by a former Ernst & Young employee, Keith Cornwell, now its chairman, to provide management consulting independent of any particular IT hardware or software company.

Most of its work is for the public sector, and it has particularly strong relationships with the Ministry of Defence. But last month it aimed to bolster its private-sector presence by acquiring Quantum Plus and its 14 employees for £4.5m.

The company was floated only last November, and hasn't quite hit the forecasts first made for it, but its results yesterday showed a very creditable 12 per cent jump in turnover to £10m in the first half of the year, with profits up more than one- third to £970,000. The 45 per cent jump in invitations to tender for new work (with no deterioration in the average win-rate) shows how fast this company could grow from here.

Cornwell has made a disappointing start since we added it to The Independent's portfolio of tips for 2005 in March, but yesterday's results should start to reassure the City.

On 11 times this year's earnings, falling to eight times in 2006, it is a buy.