City File: Emap has a head for heights

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AN UPTURN in advertising revenue, for which we all pray, should make Emap an exciting prospect. The shares might look expensive, at a 50 per cent premium to the market, but there is much to justify that.

Emap has concentrated on magazines, regional newspapers and radio - keeping out of the bear pits of TV and national newspapers. It has a good record on product launches, the latest being the oldie's rock magazine, Mojo.

Assuming BZW is right in predicting pre-tax profits of pounds 47.6m for the year to March, the shares trade at 26 times earnings. One for the brave.

NATWEST Markets is recommending Bank of Scotland shares on the basis that there should be a dramatic fall in its bad debt charge. This seems a sound basis, but NatWest also notes that the group is one of the best-run in the sector.

Being employed by a clearing bank, NatWest's analysts should know about poor management. And considering Bank of Scotland shares have underperformed the market by 10 per cent, they look good value.

WITH the shares at 545p on an optimistic 17 times earnings, the market is clearly expecting great things from WH Smith even though half-time profits this week, at around pounds 44m, will be pretty unexciting.

The shares have been buoyed by relief that the Chancellor didn't tax the printed word, cheer that Christmas money went largely into low- value books and CDs, and the assumption that WH Smith will solve its problem with its troubled Do It All joint venture.

In theory, then, it's much better to go for Menzies, the second runner in the two-horse newspaper-book distribution business with half WH Smith's sales and a third of its profits. Recently it's been trying harder, as it has needed to after upsets here and in the US. Even though the shares, at 624p on nearly 18 times historic earnings, look dear, they've more going for them than WH Smith.

AT THIS late stage in a bull market, it is often worth nosing around penny shares. And they don't come cheaper than the Wilton Group, former property trader, former controlling shareholder in the toy importer Cowan de Groot, and more recently the London vehicle for the Malaysian entrepreneur Clive Ng, uncrowned king of Far Eastern cable and associate of Oliver (Platoon) Stone.

Add in the presence of Michael Buckley, the controversial ex-chairman of SelecTV, and you have a heady mix. Further complications include a tie-up with the former British & Commonwealth boss John Gunn, who has bought half Wilton's stake in Cowan de Groot. But behind all the smoke, Mr Ng has already done a joint cinema deal with United Artists, and there's more to come. Worth a punt at a mere 2 3/4 p.

THE WORD gearing takes on a new meaning with Shandwick, the world's largest independent public relations group and an archetypal boom 'n' bust business. The shares slumped from 145p to 3p in 1991/92 before recovering to their present 32p.

Recent profits have been swallowed by interest on debts of more than pounds 65m. Meanwhile, a massive rights issue will be needed to help with bank debts due this month and up to pounds 13m of deferred consideration for past purchases. Yet next week's results could show trading profits have jumped threefold to pounds 5m. With a market capitalisation of only just over pounds 26m, the group could be a snip for one of the big boys looking for a worldwide PR network at a bargain price. Hang on.

SHARES in Psion, the maker of hand-held electronic organisers, have nearly trebled since August and risen from 180p to a 1993/94 peak of 234p since the turn of the year.

That remarkable performance has been fuelled by the company's inroads into the potentially lucrative US market since it landed there 18 months ago with its machines for salesmen, truck drivers and the like to keep in touch with base.

Since last summer it has added to these gains with strong US sales for its highly successful Psion 3 and 3a organisers.

This should justify brokers' predictions of pre-tax profits up from pounds 1.4m to pounds 3m for 1993, putting it well on the way to at least pounds 4m this year and leaving the shares on a demanding 26 times earnings. While the company could ultimately justify such faith, the shares are vulnerable to any setback.