Battered publisher starts new chapter

CITY TALK
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The Independent Online
STERLING PUBLISHER has been one of the poorest stock market performers this year. A boardroom shake-up followed the second of two profit warnings as bad-debt problems in eastern Europe pushed Sterling into an pounds 8.4m loss for the year ended in March.

Last week, however, it completed the pounds 2.7m sale of a US subsidiary, while the estimated pounds 8m disposal of exhibition organiser Turret is said to be imminent.

These deals should ease a pounds 12m debt burden, and house broker Credit Lyonnais thinks the on-going international reference book publishing businesses is capable of making pounds 2m this year and pounds 3m in 1997, which would reduce the prospective p/e ratio to nine.

But until the board is further strengthened and management can restore its credibility, the shares (35p) are to be avoided.

THE flotation of Pioneer Goldfields has turned heads in the City. One mystery is the discrepancy between the value of the business to be floated, and its parent, US fund manager Pioneer Group Inc.

The offer is expected to value the mining concern at $712m-$787m (pounds 454m- pounds 501m), whereas its owner has a market capitalisation of less than $700m. Surely some mistake? Apparently not, and Mercury Asset Management has already snapped up 8 per cent of the shares in the mutual fund group, which also counts a Russian forest among its assets.

While the attractions of PGI may be clear, analysts also deem Pioneer Goldfields an attractive business. Its chief asset is the Teberebie gold mine in Ghana, West Africa, the second biggest in the country after Ashanti Goldfields' mine. Annual production last year was a respectable 176,000 ounces, and should reach 235,000 ounces in 1995.

Management expects to see production stabilise at 400,000 ounces by 1998. The shares will be listed in London and Ghana, and are likely to be priced at between $9.50 and $10.50. If you like gold shares, this one has potential aplenty.

DESPITE the prospect of dividend growth double the sector average, property group PSIT is a sell, says stockbroker UBS.

Analyst Ray Jones reckons the company will suffer through poor growth in assets, a consequence of high exposure to industrial property. That will leave its shares trailing other players in the sector. He estimates the dividend will grow at 10 per cent a year over each of the next three years, from the net 5.375p paid this year - up 16.2 per cent on 1994. At 136p, the shares are expensive.

FRESH bid speculation gripped bank and financial shares this week in the wake of the Lloyds-TSB merger. But in among all the fever, are undoubtedly some shares which, to use market jargon, are overbought.

One such is Bank of Scotland, up a further 4p to 261p at its close on Friday, after a storming rise of 12p on Thursday. But reflecting back on the recent interims, there is little to suggest the company has much to offer shareholders, either as a possible bid target, or in terms of long-term growth.

Expenses jumped 17 per cent, squeezing margins, while profits before provisions were actually lower, if a pounds 24m credit from the disposal of Halifax Credit Card is taken into account. There is also the nagging suspicion management has bitten off more than it can chew with its surprise purchase of Bank of Western Australia. Sell.

SPECIALIST electronics supplier Telemetrix is one of those frustrating companies where, after a good run, its plans often seem to crumble to dust.

Last year, it was a startling profits decline at its 57 per cent owned US subsidiary, GTI, where profits fell to pounds 5m from pounds 12.87m. Interim profits in July were only slightly improved. In an effort to further prune the deadwood at GTI, on Friday the company announced the sale of GTI's electronics distribution arm, Esco Sales, to raise pounds 3.8m, to reduce debt in the American business.

It means GTI is more clearly focused on the global communications marketplace - it could work. But the shares, up 4p to 132p on the news, are a gamble.

BRITISH industry is forever being told it pays too little attention to design matters. Perhaps the disinterest may explain why design-led companies so rarely have strong stock market followings. One glorious exception, however, has been Havelock Europa, which has capitalised on the high-street retail revolution to win a strong blue-chip following. Clients of the stores equipment and commercial interiors business include Boots and Marks and Spencer.

On Wednesday, the group will unveil its results for the half year to June 30, 1995. The City is looking for profits for the full year of around pounds 5.2m, and pounds 6.3m in 1996. At 254p, the shares have risen strongly over the last few months. But good figures will support the rating, and there is good scope for further expansion.

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