Bottom Line: McAlpine plays safe

RAISING pounds 25m for housing land makes sense for McAlpine - it is the only area of the business showing life. The company is also right not to push its luck with a bigger issue, although its high gearing suggests it ought to, with the sector so out of favour.

The two-for-nine call accompanied a return to the black, although interim profits of pounds 900,000 from sales of pounds 317m confirm the elusive nature of decent margins and McAlpine's ability to sour one division's achievement with another's slip-up.

Profits from minerals and homes bounced from a loss of pounds 254,000 to return pounds 3.54m, but were spoilt by construction and the US, both in the red.

But there is a price for everything, and at a 21 per cent discount to the existing equity, which fell 18p to 241p yesterday, McAlpine has been realistic. At the issue price of 205p the new shares are available at 13.7 times this year's expected earnings and just 10 times those forecast for 1995.

At 38 per cent less than the shares traded in February, that is good value and the discounted rights should be taken up. But the rest of the sector has also fallen a long way; many pure housebuilders, without the risk of contracting or the distraction of the US, are available for not much more.

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