City File: Bock hopes boost Lonrho

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The Independent Online
THE WAR between Tiny Rowland and Dieter Bock continues to flare up, though Lonrho- watchers are increasingly confident that Bock will win sooner rather than later. Hence the recent relative chirpiness in the shares, helped by proposals to float off some of Lonrho's African interests.

With the highly profitable Ashanti precedent to go by, the newly announced African hive- off could release more of Lonrho's undoubted riches, hidden for so long by Tiny's retentive policies. Even though Lonrho shares have risen by over 50p since Bock first came on the scene, at 141p they are still a fifth off the year's high and worth tucking away.

UNITECH, the power supplies company, has soared this year thanks to the strong yen, Japanese recovery and good prospects for recovery in its basic products elsewhere.

With cheerful interim results in January, Unitech shares have risen this year from below 250p to the present 316p, only a few pence off the year's high. Unitech, Swiss- controlled, is the world's biggest maker of power supplies. But the real cream on a solid base is the 51 per cent stake in the Japanese Nemic-Lamda. This alone is worth more than Unitech's total market capitalisation.

Unitech's recent solid performance shows that it is a share to hold in good times and bad, waiting for the magic moment when the value of the Japanese investment emerges in the parent's share price.

SHARES that have remained rock solid over the past troubled weeks must be worth looking at. One is Fairey, which has barely moved around its present 741p. When it was bought out of the Pearson group in 1987, nearly half the profits came from the unpromising defence and aerospace sectors. Now it operates in specialised, high-margin niche businesses. But because of their sheer number, Fairey tends to be undervalued compared with groups such as Bowthorpe and Oxford Instruments.

That's the case put by broker James Capel in a buy recommendation, complete with figures showing steady growth.

A BANK unfairly overlooked and thus undervalued: that's SG Warburg's judgement on Ireland's largest financial institution, Allied Irish Bank. Thanks to canny management, AIB has avoided most of the mistakes made by its larger, British-based brethren when they diversified away from their core business. AIB's only real problem has been in consumer loans in Britain, where non- performers reached a fifth of the total before they were taken in hand.

Ireland's domestic economy is the fastest-growing in Europe, and AIB is admirably placed to take advantage. At 241p, the shares are a decided buy.

BROKERS are beginning to cluster around Countryside Properties, the housebuilder that recently announced a 43 per cent interim profits increase and the sale of a pounds 60m property portfolio.

Some 900 of its expected 1,500 completions this year should be for the more stable housing association market, with only 600 ranked as speculative. And as it is concentrated in the affluent South-east, its average selling price is pounds 120,000 while labour costs are not significantly higher than anywhere else.

Countryside's annual profits are heading for pounds 9m this year and pounds 15m next, against only pounds 4.7m in 1993. Hard to disagree with UBS's stance as 'strong buyers'.

SHARES in Iceland Group, the frozen food retailer, have been under pressure since March, when the company blamed price deflation and severe competition for slower growth. That was followed a month later by four directors quitting.

This may be time to buy Iceland's 5.5 per cent convertible loan stock, which offers the security of a loan stock and needs only a modest rise in the underlying shares to make conversion a snip.

Both the convertibles at pounds 126 and the shares at 138p yield 3.4 per cent. Buy the stock.

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