City File: Beazer should build profits

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THERE'S always a first time - even for shares being sold by Lord Hanson. Next week, Beazer Homes comes to the market on a historical p/e of under 15 times, and Howard Proctor of Panmure Gordon reckons this makes them a bargain: the recovery in the housing market is healthy enough to put other house-builders on a far higher p/e; and Beazer has the advantages of a proven management team, and a well written-down land bank.

Although this will boost profits rather artificially this year, Mr Proctor is looking for profits of pounds 53m in 1995, which would put the shares on a prospective p/e of a mere 13, even with a full tax charge - and there are still allowances to come. Worth a punt.

WOULD you buy shares in a company which broke its banking covenants last year, lost pounds 14.2m in the first half of this financial year and expects to remain 'substantially loss- making' for the rest of the year?

Well, Sandy Morris, the well-respected engineering analyst at NatWest Securities, would - in BM - and institutions are heeding his message. The argument: that once BM is shot of its disastrous distribution businesses, Blackwood Hodge (and sales of these are well under way) BM will be left with sales of pounds 150m from a variety of sound, and already profitable, engineering businesses. The shares, virtually worthless at one point last year, are worth picking up at 39p.

WHEN in doubt, go for boredom. That's increasingly the cry as markets continue to be nervy. And they do not come more boring than ICI, especially now that its pharmaceutical business has been hived off into Zeneca. But Charles Lambert, at Smith New Court, makes a strong case for the old stager.

The key point is that the abortive bid that led to the demerger of Zeneca was part of a dramatic change of heart reflecting the management's discovery that shareholders mattered.

Mr Lambert reckons that, as a result of the new concentration on increasing the return to shareholders, earnings per share could bound from 20p last year to 55.7p in 1995, giving a prospective p/e of a mere 13 at 778p, a significant rise of more than 30p over the week.

THE market is in a mood to be disappointed even by good results. And Vinten, the impressive electro-optics business, could face just such a reaction when it reports this week.

Over the past few years, Vinten has brilliantly got away from its previous reliance on the defence business, and developed an increasingly international presence in a number of niche markets such as camera mountings and robotics. The result could be that this week's pre-tax profits rise by 30 per cent to pounds 13.4m, putting the p/e below 20. Although the shares have remained remarkably stable at around the 500p mark during the market's troubles, they could well wobble, however good the figures.

TOMKINS' latest deal, announced on Friday, bolts neatly on to its US motor-mower business and emphasises that Greg Hutchings retains an eye for a bargain.

At last the market may be getting the message - that Tomkins is a snip. A long-time Tomkins-watcher, Charles Pick of Panmure Gordon, reckons that earnings per share could be healthily up in 1994 and 1995. At a mere 251p, the shares have underperformed even the lack- lustre conglomerate sector since the purchase of RHM.

But this proved to contain no horrors, and the food business proved to be just as amenable to cost-cutting as any other of Tomkins' past acquisitions. But there has been an overhang: an institution that bought very heavily at the time of the RHM purchase has been offloading since last June.

AS owner of the Blackpool Tower, First Leisure should gain this summer from the unveiling of the world's biggest roller- coaster at the town's Pleasure Beach. That should put the icing on the cake at First Leisure, which is tilting more space in its ten-pin bowling clubs towards Sega electronic games. Profits should rise from pounds 32m to pounds 38.5m this year and pounds 42.5m next. At 319p, the shares are on a prospective multiple of 18.9. A buy.

KUNICK has not paid a dividend since 1991 and was almost bust 18 months ago. But sharp pruning by the chairman, Christopher Burnett, and the recent flotation of the Goldsborough nursing home offshoot, have restored the group to health.

Dividend hopes are reviving as Kunick rolls out more amusement machines. Profits should rise from pounds 5.1m to pounds 7.2m, taking the multiple to 20 at 16p. Pricey, but Mr Burnett also has an pounds 11m expansion fund from the Goldsborough float.

YOUNGER management and a new computer ordering system should give a fillip to shares in Wholesale Fittings, the electrical goods distributor, which has nursed its balance sheet through the recession and stands to gain from an upturn in housebuilding.

Profits for the year to end- April should be pounds 2.5m against pounds 2m, paving the way for a possible pounds 3m next time. That would put the shares, 335p, on a p/e of 27. Forward-looking, the group is packed with potential as operational gearing takes hold of the its low cost base with a vengeance.