City File: Kingfisher loses glitter

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The Independent Online
BLACK-EDGED diagnoses of the French economy are believed to be behind the woeful behaviour this year of shares in Kingfisher, the Woolworths, B & Q and Comet retail group headed by Sir Geoffrey Mulcahy.

The price has plunged 150p to 624p as the market has become engulfed in gloom over the resignation of Mair Barnes at Woolworths, the implications of the Christmas Sega Mega Drive price war with Dixons and the impact of the French recession on Darty, the group's electrical retailer across the Channel.

The slide has slowed, temporarily anyway, as institutional buyers fish for the bottom around a prospective p/e of 18.

Brave investors may join the game. The less adventurous will wait until next month's yearly results, which will be accompanied by a statement from the normally taciturn Mulcahy.

AT a mere 12.5p the shares in International Communication and Data are a pure heads-you- win, tails-you-win-even-more situation. While waiting for a possible bid from the group that nearly took over last December, shareholders in this marketing data company can relax now that the existing management has got the company back into profit, thanks to a reduced interest bill and a dramatic reduction in head office costs.

The bid was repulsed with difficulty and a lot of sound and fury. But in a dramatic turnaround the chairman now says that if a bid 'were to take place at a fair price it would be a successful outcome to the upheavals of last autumn'.

THE main British composite insurers are too big a meal for Continental predators, reckons David Nisbet of NatWest Securities, so forget talk of a bid premium. But the downside is limited: net assets have been topped up by the market's rise in the second half of 1993 - and none of the big six was heavily into California with its earthquake problems.

So it's down to a question of management. Nisbet plumps for General Accident, which reports on I March. Even better could be Commercial Union, which made its mistakes in the early 1980s and thus avoided problems later in the decade. Sharp falls in British underwriting profits could mean a jump in pre-tax profits from pounds 31m to more than pounds 200m. At a mere 648p, yielding near 5 per cent, CU's new management is worth backing.

Shareholders in retail / property / mail order should not worry that, for tax reasons, plans for returning some of the group's pounds 1.5bn cash hoard to shareholders didn't work out. The mere existence of the plans showed that the board is trying every possible device to release more from what must be the richest store of undervalued assets on the market.

There are plenty of other possibilities: a float of the enormous, and rock solid, property portfolio; further expansion of the consumer credit business; or following last autumn's pounds 350m repurchase with a much bigger share buy-back. At 624p the shares are worth buying if only to encourage a board that seems far more aware of the need to do something about its cash than, say, GEC. SURPRISINGLY, the shares in SelecTV have not moved much since the upheavals in the television world, including last week's purchase of a 20 per cent stake in HTV by Flextech, backed by the world's biggest cable company, TCI.

Yet SelecTV has the key assets for a fashionable media stock: a stake in a television company, in the form of 15 per cent of Meridian, which holds the franchise for the south of England; and a library of television productions, ranging from The Likely Lads to Birds of a Feather.

Even more promisingly, SelecTV and the Daily Mail (which has a 13.65 per cent stake) are partners in the only cable channel that will be carried by all the six cable operators in London. At 37p the shares are not just fashionable, they're cheap.

Shares in Sheafbank Property Trust look set for a run. The company, whose shares are trading below asset value, is expected to buy out its partner, the Philips Pension Fund, in UK Estate, a property investment venture.

Last March Estate's portfolio, mostly of fully let commercial properties in provincial cities, was valued at pounds 18.6m - against Sheafbank's market value of about pounds 5m at last Friday's closing price of 24p. Sheafbank's balance sheet, weak at present, will be buttressed by refinancing.

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