Churchill China dishes Royal rival

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The Independent Online
Royal Doulton, that household name in up-market china may have overshadowed figures on the same day last week from its smaller rival Churchill China, but the latter could well repay a closer look.

Whereas Royal managed a healthy 17 per cent increase in pre-tax profits, Churchill did even better, raising profits by 20 per cent to pounds 2.6m on sales that grew 16 per cent to pounds 26.6m. The shares, up 29p to 570p since, are a buy.

Cirqual (152.5p) is an AIM engineering stock that hopes to head off to the main market shortly. It has added to its credibility with the recent acquisition of Wollaston Engineering for pounds 7.5m, paid for with a share placing.

The chairman, Tony Gartland, has a strong track record, having built FKI from an USM company to an international business in the 1980s.

Cirqual's current businesses are strongly cash positive. Most of the components it produces, such as aluminium extrusions, or thermoplastic profiles, are in small niche areas with healthy margins.

Profits in the year to August 1997 should top pounds 5m. The group maintains it is on course to meet its profits forecast for the year to 31 August 1996 of pounds 3.05m. Buy.

Gardiner Group, the intruder alarm distributor, has been in the doldrums since 1992, after a fraud was uncovered. But it could just be that the group is poised to recover some of its old potential.

New management has hit on a successful formula of selling closed-circuit TV systems through its branch network. With demand for intruder alarms set to grow, there should be scope for improvement over the next few years.

There is little sign from the management that it wants to risk a growth- through-acquisition strategy, with an already well-developed European network. For that matter, the company could well be on the receiving end of a bid.

Expect profits before tax of around pounds 4.5m in 1996, rising to pounds 5m in 1997. On an undemanding prospective p/e of just under 11, the shares look attractive at 29p.

Back with biotech, and Vanguard Medica. Despite a board and advisory panel packed with industry heavyweights, there is relatively little upside in the shares, according to broker Yamaichi.

Of its five compounds under development, the best product - VML251, for migraine - reported good Phase IIa results in July. Another drug, VML262, for psoriasis, will begin clinical trials next year.

However, with first profits not expected until 2002 at the earliest - one of the longest lead times of any company in the sector - the shares (472.5p) offer few attractions at present. Sell.

Williams Holdings (363.5p) has been tarred with the same brush as Hanson and BTR. And since early last year, its performance has been uninspiring. Yet in the last few weeks it has begun to outperform. What is up?

For one, the market is probably catching on to the fact that as a conglomerate, Williams is hardly in the same category as Hanson and BTR. Its business is run along only two divisions: fire protection and security, and building products.

It also seems that the group is focusing on fire and security as the way forward.

Interim results on Tuesday should for the first time provide over half of operating profits. In part, this is down to some significant bolt-on acquisitions. Building, however, has not seen a substantial deal since the Solvay purchase two years ago. Could it be, even, that building is out of fashion with the Williams management?

The company has already said it is looking to sell its seven home improvements companies. That may just point the way to a wholesale exit from building. Either way, shareholders can only benefit. Stick with the shares.

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