City talk: History suggests that Camellia has a future

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The Independent Online
Camellia (20p) is something of an oddity, but one that could well repay investors' patience. Unsung, certainly, but there are a core of followers for the tea plantations to fine art company. A big attraction, as one fan puts it, is that it is stuffed to the gunnels with hidden assets. Some of these are quite extraordinary, such as its collection of historical manuscripts, possibly worth millions. Items in the collection, range from Impressionist letters to original papers by Einstein, and love letters between Elizabeth Barrett Browning and Robert Browning. The shares have suffered in the past few days on poor figures from its associate company, Linton Parks. But with its hidden riches, the downside is limited. Although the company sees the manuscript collection as a long-term investment, it could well reward shareholders prepared to take a similar view. That, and the fact that it seems a well-managed business, suggests the shares merit a buy.

Strength in computer shares continues unabated. Investors who have bought into Sema Group, the computer consultancy and project management group, in the past three years have done brilliantly. And the latest sharp rise in the price, from 500p to 674p in the space of six months, may well be justified. But competition in the areas in which Sema operates is also hotting up. Several of the computer majors, such as IBM and EDS, are now active in businesses Sema once enjoyed mostly for itself. At 24 times this year's earnings, and 29.7 times 1997, the shares leave little to chance. Take profits.

Pity poor old Kwik Save, the supermarkets group. It seems to be suffering on all fronts. As a note by broker BZW points out, it attempted to do the impossible: protect both sales and margins. The consequence was to leave it open to the discounting launched by Tesco in 1993. Sales fell in 1994 and 1995, and look set to fall another 3 per cent in 1996. It was also piggy in the middle, faced with the even fiercer discounting of the Limited Assortment Discounters, or Lads, such as Aldi and Netto, from continental Europe. The poor results last week give chief executive Graeme Bowler a clear task: restore confidence in the group, or watch the shares languish. Sell.

Bula Resources, the Irish independent explorer, is gushing Russian oil. Tomorrow sees its second well on the Salymskoye oil field spudded. The company has great hopes for its 12.5 per cent interest in the field, with proven and recoverable reserves of 585 million barrels. Other wells in the field have tested at a daily rate of more than 8,500 barrels a day, and the company is also on target to commission a pipe to its first well by July. The shares, now at 2p, have lost much of the gains since the company first announced its Russian drilling programme in March. But the story broadly remains the same as before: a speculative buy.

There is an institutional placing in the offing sometime in June or July for City Technology. Founded in 1977 by boffins at City University in London, the company was bought from the college by management for pounds 24.5m in 1993 when it outgrew its parent. The company makes gas sensors, and the placing should raise pounds 20m of new money for the company, to value it at more than pounds 75m. In the five years to June 1995, sales have risen to pounds 14.2m from pounds 5.1m, while operating profits hit pounds 5.8m, up from pounds 1.3m. Depending on the pricing, the shares could be well worth pursuing.

If Sema may be about to receive a taste of tougher times, Sage, the accounting software group, looks set to continue its strong record of growth. Figures last week saw interim profits rise 37 per cent to pounds 16.1m for the half-year to 31 March. Revenues leapt 42 per cent to pounds 71.8m, with earnings per share of 9.92p (7.46p). While growth was particularly buoyant in France, and the UK, the US was disappointing. Expect full-year profits of pounds 30m, to put the shares (432p) on a p/e of 23.6 - in line with the sector. Buy.