City File: Eurotherm radiates prosperity

DREADFUL markets, no sign of upturn. Don't let it bother you. Follow the lead of Eurotherm's management.

For despite operating in what could hardly be called ideal conditions, the heating control and automation group will report record profit levels on Tuesday. NatWest Securities reckons that pre-tax profits will be up by more than a third at pounds 19.9m.

The management has been cutting costs and squeezing up margins and reckons there is further to go.

Meanwhile, the economic conditions are starting to improve. Even if the company's shares are on 22 times earnings, they could rise further.

MILLGATE has not set the market alight since its recent placing at 40p. But the car alarm distributor looks like it has reasonable prospects.

The management team - Paul Layzell, who used to head BMW (GB), and Clifford Bosely, formerly of Perry Group - is keen to expand the company and is looking for acquisitions. Meanwhile, Millgate distributes the highly successful Italian car alarm, Laserline.

Profits for the year to November are forecast to reach pounds 1.5m, putting the shares, at 41p, on around eight times earnings. A steal.

GOLD from Sardinia sounds like something mentioned in the Iliad rather than a serious investment proposition.

However, it appears that the backers of Sardinia Gold Mining are serious, as modern mining techniques look set to open up the island's 360,000 ounces of gold reserves for exploration.

The island was one of the few mining areas left unexploited by the Romans, mainly because of the low gold density in the rock. Laurie Beevers, gold guru at the Manchester stockbroker John Siddall, is enthusiastic about the prospects and is recommending investments in Gemcor, the Australian resources company that owns 35 per cent of the Sardinia project and is traded in London.

THE GROWING fan club for shares in the Telegraph Group, currently trading at their 1993 high, should swell even further tomorrow when the stock becomes a constituent of the FT All-Share index.

That automatically puts the company, which publishes the Daily Telegraph and its sister Sunday newspaper, on the buy lists of many institutions that run index-tracking funds. Those funds must faithfully reflect the composition of the index.

The newspaper group is eligible for membership of the All-Share as a result of a decision by Conrad Black, the chairman, to cut his master company's stake in the Telegraph from 68.3 to 66.4 per cent, creating the amount of liquidity required by the membership rules.

Last month the company announced a 49 per cent increase in pre-tax profits for the first nine months of the year, providing a strong platform for its shares in 1994.

THE reorganisation of Wills Group, the fluid-handling equipment maker, is on the way to paying off after a pounds 5.2m cash injection through a rights issue last February.

Although profits for the half-year ending this month will be little more than pounds 500,000 ( pounds 300,000 last time), by the June year end there should be a near-doubling to more than pounds 3m.

Although the group is heavily dependent on continental Europe, the shares have risen steadily since their 1991 low. At their current 26p, they are poised to reward the patient nursing of the managing director, John Huckle.

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