CITY TALK: EFT financing its way to growth

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The Independent Online
EFT GROUP, which operates in the unglamorous world of company leasing finance, is in the midst of consolidating its debt and expects to obtain a significantly cheaper cost of funds once the process is over. The exercise follows its recent acquisition of Haydock, a north-of-England car finance specialist. The deal expands its customer base into the north of England and adds on a consumer franchise to its hitherto mainly corporate clientele. Broker Bell Lawrie White says the two companies fit well together and forecasts that the combined group can produce profits of around pounds 4.6m in the current year, up from pounds 2.9m in 1994. That leaves the shares at 79p on a relatively modest prospective p/e ratio of 11.4 times, making them a buy for the group's conservative management and reasonable prospects over the next few years.

EVER since it reported losses of pounds 71m in December and followed that up at the half-way stage in May with another loss of pounds 30m, Huntingdon International has been in a mess. But it also managed to dispose of one of the millstones around its neck, the American HEE business. And with its other problem child, Travers Morgan, out of the way and new management on board, the shares have recently been ticking upwards. At 67p, they are well above the 20p to which they fell in December. All Huntingdon is left with now is its core animal life sciences business, which is healthily cash generative. An acquisition is likely in the near future.

EXPECT news from Card Care, the credit card fraud specialist, of expansion into a new business in the next few weeks. The company is one of those appealing firms with a strong niche product, and the added glamour of a dash of hi-tech ingenuity in the shape of the system it uses to prevent credit card fraud.

The downside is that the company remains in start-up mode, and has only made losses to date. But these should fall substantially this year, and there is every prospect the company can turn a reasonable profit by 1996. So far its system, which transmits details of lost and stolen cards via Teletext, is in use by almost 2,000 petrol stations, and it expects the number to rise substantially in the years ahead. The shares, at 34p, are a gamble, but they could pay off.

IF CARD CASH remains a hi-tech business that may with luck be on its way up, Reuters (528p) is one of those technology stocks that arrived a while ago. Although the roots of its business lie in journalism, its success has come from purveying financial information and prices to markets around the world.

Its figures this week, however, gave the market pause for thought. Did chief executive Peter Job's cautiously worded statement suggest that growth may be about to slip back to only a single-digit figure? Whatever, the market cooled, and there was talk of profits downgrades. But the company has an enormously strong franchise and should show profits growth for years to come. Hang on.

PAUL MORLAND, who follows smaller companies at NatWest Markets, recommends Menvier-Swan as a buy, on the grounds that it is a high-quality company operating in growth markets.

The business is mainly in emergency lighting, and the management intends to make it the lowest cost producer in the industry. To this end, it has invested pounds 11m over the past two years. Even so, year-end gearing at the recent results was a mere 3 per cent. This gives ample scope for acquisitions, which should, says Mr Morland, be enhance earnings. With earnings growth of 23 per cent a share for the latest figures, the shares at 288p remain on track to continue outperforming.