City File: Airtours celebrates the bid that flew away

Click to follow
The Independent Online
AIRTOURS must be delighted to have lost out in its pounds 400m offer for the rival holiday group Owners Abroad. While the problems at Owners intensify, Airtours - which has bought Hogg Robinson, Pickfords and Aspro since the bid lapsed - goes from strength to strength.

Tomorrow it will reveal it has performed well in the late bookings market, has good sales for next year and has sold all its holidays to its new destination, Cuba. Bruce Jones at Smith New Court is predicting pounds 45m of profits, after the pounds 9m cost of the Owners bid, and even that may be too low. Assuming profits of more than pounds 60m next year, the shares are on only 12 times earnings. Cheap.

WEEKLY collected credit is hardly a glamorous business. Lending money to poor credit risks at high interest rates and sending people round to collect it is the opposite of high finance. But Philip Gibbs at BZW reckons the business is thriving, taking advantage of the increasing reluctance of high-street banks to lend small amounts. There are three quoted companies in this sector: Provident Financial, London Scottish and Cattle's. All look attractive but the Bradford-based Provident is Mr Gibbs's favourite.

ALTHOUGH it was hitting new highs this week, Linton Park - the former Eastern Produce (Holdings) - is still attractive on a yield of more than 6 per cent and an earnings multiple of 10 after the recent acquisition of British African Tea Estates.

This is an internal reshuffle. BATE was bought from Lawrie Group, which owns 63 per cent of Linton, both part of the Camellia commodities octopus.

Linton already has tea estates in Malawi, so the move could save overheads. But it also comes towards the end of a year in which the price of top- quality tea has risen from 170p to 200p a kilo and looks set to go higher. Linton's shares have risen from 260p to 285p on news of the deal, but have the momentum to reach 350p.

INVESTORS who bought shares in Bluebird Toys two years ago, when they were just 26p, have good cause to thank the chairman Torquil Norman.

Having pulled the group back from the abyss, he is now pushing it forward on the back of its successful miniature dolls - Polly Pocket and Mighty Max.

Even with the shares at 584p, Tim Steer at Smith New Court thinks there is more to go for. He is predicting profits of more than pounds 8m for the year just ending, indicating an earnings multiple of just 10.3. Looks like the Bluebird will soar.

THE market's love affair with Scottish & Newcastle shows no sign of cooling.

In the two months since the acquisition of the Chef & Brewer chain from Grand Met, the shares have shot from 466p to 520p, putting them on a far more demanding rating than bigger rivals like Bass and Whitbread.

Tomorrow's interims could disappoint the bulls and set the shares back. This could provide a splendid buying opportunity since S&N has an excellent collection of brands and sorting out the neglected ex-Grand Met pubs will produce a major bonus in the medium term.

ONE gainer from the Budget squeeze on local authorities should be Capita Group, which specialises in finding computer and other white-collar staff for such bodies.

Kenneth Clarke's strictures will encourage municipalities to sub-contract work, which can only add to Capita's order book. Profits for the year ending next month are already forecast by the brokers James Capel to jump from pounds 4.4m to pounds 5.4m, so the business should be well set for 1994.

At 190p, the shares are on a demanding multiple of 24 times the expected 1993 earnings, but the growth rate is more than capable of justifying that.

RECENT poor results from Borthwick have had an unfortunate fall-out on the fellow flavourer Treatt, now 40p off its 1993 high of 183p. But that could provide a useful opportunity for the nimble investor. Treatt is prospering from the apparently insatiable demand for 'freshly squeezed' orange juice. One of its more fruitful lines is buying orange skin from Third World farmers, distilling it and selling it to orange juice makers. They can then call the resulting brew 'natural'.

Three years ago, Treatt set up a plant in Florida that is only now breaking into profit. At 140p, the shares are on an undemanding 13 times likely earnings for the year just ended.

A CLASSIC City row comes to a head next week with an extraordinary general meeting of International Communication and Data, owner of the biggest collection of personal databases in the country.

A shareholder group hoping to bring in some much- needed professional marketing expertise is involved in a slanging match with the management, which has already done a lot to clean up the company without taking many positive steps. Whatever the result of the EGM, the shares seem bound to go better than their present 11p.

(Graph omitted)

Comments