BET struggles to shake off the past

CITY TALK

AFTER four years, the jury is still out on the Stakhanovite efforts of the US-born L John Clark to turn round BET, the support services group brought to its knees by an orgy of diversification in the 1980s. On Tuesday the group reports 1994/5 results, and the market is expecting a profits rise from pounds 92m to pounds 106m, where the price-earnings ratio will be around 15. The shares will need all of that to get back on the road, after a revival that ran out of steam last year.

GOOD shares are always expensive. Never was this truer than with Serco, the public sector contracts manager that counts Thanet Council and the European Space Agency among its customers. At 293p, the shares are selling on a prospective p/e ratio of more than 20 for 1995, and yield a tiny 1.7 per cent. But this has proved no deterrent to a classy group of investors including Legal & General, the British Coal and British Gas pension funds, Foreign & Colonial, and clients of stockbroker Cazenove & Co. The reason: a profits growth record stretching back several years, and the prospect of more to come. Profits should rise from pounds 12.5m to pounds 15m this year, and pounds 18m next. The group is shortlisted to manage new prisons at Dyfed and Merseyside.

MEPC shares have been strong in the wake of last week's excellent results from Land Securities, the daddy of the property sector. It is MEPC's turn on Wednesday, when it unveils interim results. Both BZW and Smith New Court urge caution, rating the shares a sell at 380p, let alone the 400- plus they have now reached. The bulls were too eager to ignore the warning by Peter Hunt, Land Securities chairman, that "there is not yet sufficient occupational demand". Avoid until we hear more from MEPC this week.

BOOTS shares have marked time for the past two years, but they could be about to break out again. On Thursday, the chemists' chain should report yearly profits up at least pounds 100m to a record pounds 520m, where the earnings multiple is likely to fall to 15, while the yield could stretch upwards to 4 per cent. Boots has shown resilience through the recession, a tribute to its reliability. A good time to buy.

SELL Sidlaw. The packaging and oil services group's recent interims were very disappointing, with profits falling from pounds 6.6m to pounds 4.1m as the mainstream packaging business encountered severe price competition in the UK and Netherlands. Continuing raw material price rises mean the heat is likely to stay on beyond the September year-end. That spells grim news for the annual profit - probably falling from pounds 14.6m to pounds 8m, which would leave the dividend uncovered and under threat.

SHARES in Mersey Docks and Harbour Company, the port facilities operator, could be going in the right direction again after more than a year on the slide. Investment Research reckons the downtrend has been decisively broken, and expects the 535p peak to be tested within the next year. That compares with the present 438p, where the prospective p/e ratio is around 15 on the basis that profits rise from pounds 33.6m to pounds 38m this year, as most analysts predict. A buy.

TAKE up Scottish & Newcastle rights, says stockbroker Bell Lawrie White in the wake of S&N's purchase of Courage. "We regard this as a positive move for S&N," says the broker, which has pencilled in pre-tax profits of pounds 325m for the current year. But it reckons the real merger benefits will emerge only in 1996/7. At 540p the shares are on a prospective p/e of 14 for next year. Buy, but beware the not-yet-extinguished risk of a monopolies investigation.

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