William Hill is still a sound bet

Forth Ports a real hot property; TT not such a livewire as it reports loss of £6m
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The Independent Online

Punters who followed this column's advice and gambled on the stock market flotation of William Hill are in the money. Shares in the betting group have soared by 40 per cent since it listed on the London market in June 2002.

Punters who followed this column's advice and gambled on the stock market flotation of William Hill are in the money. Shares in the betting group have soared by 40 per cent since it listed on the London market in June 2002.

The group, which owns 1,581 betting shops, proved true to its word and posted racy interim results yesterday. In July, the group, which also has telephone and internet operations, issued that rarest of announcements: a warning profits would be higher than expected. In the six months to 1 July, they were £85.6m compared with a £12.2m loss last time.

Unusually for the oft-shady world of betting, the secret to William Hill's strength is no mystery. David Harding, chief executive, says the company has simply given the gambling public want it likes best: more ways to empty its wallet. In the past six months, the group has added virtual greyhound racing in its shops and an online poker site to its internet casino.

The roll-out of controversial fixed odds betting terminals - machines that let punters place real time bets on sporting events around the world as well as on a variety of games such as bingo and roulette - continues apace. Most of its shops have at least one terminal and there are 2,525 across the estate. FOBTs will account for almost one-fifth of the company's earnings before interest and tax this year, and just over a fifth in 2004, according to the group's broker. Although the legality of these machines is being challenged by the casinos industry, William Hill's share price is already discounting an unfavourable court ruling.

Bookmakers are not, in the long-run, sexy growth stocks, but over the next couple of years there is plenty for William Hill to go for. Mr Harding is currently hanging on to the vast wads of spare cash the company throws off, in case the impending deregulation opens up new investment opportunities. If it doesn't, substantial share buybacks would be ample consolation. The shares, up 2.5p to 320.5p yesterday, are cheap and still worth a flutter.

Forth Ports a real hot property

If it weren't for the name, you might have forgotten Forth Ports runs seven ports - six in Scotland and Tilbury on the Thames. There is such a buzz over the group's surplus property interests in Edinburgh, whose waterfront is enjoying a renaissance akin to that of London's Docklands, that Forth seemed more a property company than a ports group.

Which suited it fine while the economic downturn kept profits from the ports under pressure. Yesterday, though, Forth boasted an improved performance across its operations. In Tilbury, efficiencies and an improved marketing effort meant 11 per cent more cargo passed through in the six months to 30 June. And at Grangemouth in the Firth of Forth, the company is finding more businesses which want to bypass the UK's congested road and rail networks and freight their products direct to continental Europe by sea.

Of course it remains true that the property interests underpin the long-term growth of this company, since it will be able to sell off plots for development in Edinburgh for at least another decade. In June, it received outline planning permission for a giant scheme at Granton Harbour, including 3,400 new homes, and it has also revised the masterplan for the Western Harbour to allow more expensive luxury apartments.

Even with greater investment in tidying the Edinburgh property up for sale and (hopefully) expansion at Tilbury, there is scope to grow a dividend which already yields 3.5 per cent at yesterday's record share price of 1,015p. Longer-term there is the prospect of returns of cash.

There are two sides to the Forth Ports story, and both are positive. One to tuck away.

TT not such a livewire as it reports loss of £6m

TT Electronics enjoyed the telecoms and IT investment boom, and is muddling through the bust. The company makes computer circuit boards, resistors and other gizmos, but it has spent the last few years cutting back its operations as markets fell away beneath it. Interim results yesterday were disfigured by the accounting for disposals, leaving the company with a loss of £6m.

The highlight was its automotive division, which makes electronics for car air conditioning and steering systems, among other components. Despite a 3 per cent drop in car production in the period, this division's turnover was up 11 per cent now its parts have been designed in to new models from BMW and Mercedes Benz.

But elsewhere there was a further decline in the loss-making telecoms operations and the prospects look bleak for the circuit boards business, since customers have outsourced a lot of production to the Far East, where TT can't compete. There were also a couple of cock-ups in the electricals divisions, making power cables for windfarms and power generator sets for petroleum installations in North Africa.

With the dividend barely covered (at a share price of 132p the yield is 8 per cent, reflecting the risk it could be cut), and a price-earnings multiple of 14, the stock is too expensive.

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