Bottom Line: Tring on song

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The Independent Online
TRING, the music publisher, had little but good news to tell shareholders yesterday. Sales, profits and earnings per share all rose handsomely in the year to March.

Clouds taking the form of legal wrangles, which undermined confidence in the company and led to the postponement of the firm's recent flotation, are clearing. It has received no new actions since February and five of the 12 outstanding suits have been struck out.

Investors can also look forward to the completion of negotiations with large high street and out-of- town retailers.

Tring prices all its CDs and tapes below pounds 4 and relies on impulse purchases from petrol stations and newsagents for most of its sales. If it gets shelf space in leading stores shareholders can expect a significant fillip in turnover. Margins may suffer at the hands of the notoriously price- conscious multiples, but the volume potential will compensate.

However, the best news for investors is in the share price.

Unusually for a stock market newcomer, Tring shares are trading above the issue price. Despite a 1p fall to 135p yesterday, they have risen 12 per cent since the February float. And because the market has fallen 15 per cent over the same period Tring's outperformance tops 30 per cent.

The company's past, and its occupation of a low-budget niche, may mean that the shares will never command a premium rating.

However, on current year forecasts that Tring will make taxable profits of pounds 6m, the shares trade on a prospective price-earnings ratio of 13.

Given that Thorn EMI's forward multiple is 17, and the sector average is 18, this represents considerable value. Buy.