The Investment Column: Close Brothers is still a decent investment

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The Independent Online

Close groups its operations into investment banking - that's the asset management, corporate finance and Winterflood market-making businesses - and traditional banking. The banking half is not performing well at the moment. A large part of its activities is the financing of insurance premium payments for companies, and this has been less of a growth area now premium growth has eased. Don't overlook the possibility of rising bad debts at this division while all the focus is being put on investment banking.

Yesterday's figures also showed a disappointing 6 per cent fall in profits from the market-making activities. Winterflood was a powerhouse of activity in the wheeler-dealing dot.com days, when private punters drove interest in penny shares, and it is not unreasonable to expect a decent enough recovery if stock markets stay positive. This is also a growth area for Close in Germany.

On balance, positive then. "The word 'caution' is notable by its absence from the outlook statement," one analyst said. The shares are now a little below where we tipped them in March and, on 12 times earnings with a dividend yield that is not far off the market average, it looks a buy.

Bioquell is too pricey for now

Bioquell is a microscopic Rentokil. Not just in the sense of being tiny compared with the great rat catcher. It is out to get the germs and viruses which cause hospital superbugs and contaminate research laboratories or drug factories. It wheels R2D2-style machines into the room and pumps it full of hydrogen peroxide.

It is a disruptive way to clean a ward, but Bioquell believes hospitals (or governments) will decide it is worth it - not often in the UK, but in the US, where it has its first contract to routinely clean a hospital.

It is taking a disappointingly long time to establish the cost effectiveness of the system, even if its actual bug-killing effectiveness is not in doubt. Meanwhile, sales of decontamination and other services to the drug industry are poor, and there will be no profit this year as originally hoped.

Since the commercial potential of anti-superbug technology has caught investors' imagination, Bioquell shares have becometoo expensive. They probably did not fall enough yesterday (3p to 102.5p) on the latest disappointing numbers, as news of the US contract and progress with a new treatment for leg ulcers to keep future hopes aflame. Avoid.

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