Henlys cashes in on the bus wars

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The Independent Online
THE BUS wars that are sweeping Britain's roads and high streets hold out the prospect of more than just cut-price fares for commuters. Henlys, now one of the UK's largest coach builders, has seen orders climb rapidly with the expansion of activity in the sector.

Recent results were ahead of most forecasts, and there is every reason to believe that the shares will continue to outperform. At 598p, they trade at around 14 times 1996 pre-tax earnings, which could reach pounds 33m.

Shareholders have enjoyed spectacular returns over the past four years, with the shares up fourfold in that time. That rate of return will probably slow, but there is still plenty of incentive to stick with current management. Buy.

PROOF OF the woes besetting food stocks comes with some of the yields to be found in the sector: 10.1 per cent for Albert Fisher; 7.5 per cent at Booker and 7.2 per cent at troubled United Biscuits.

Much of this reflects caution over the continuing price competition in the sector, and justifiably so. However, yields like this are tempting.

Perkins Foods, on 7 per cent, is one where a cautious buy can be argued. Although its latest results show a mixed performance - frozen foods, for example, experienced tougher trading than in 1994 - matters are definitely improving. Pre-tax profits of pounds 21.9m, against last year's pounds 19.7m, are still below 1992's pounds 22.3m. There were also significant benefits from favourable exchange rates.

However, profits should edge ahead again in 1996. At 79.5p, that leaves the shares on a prospective multiple of almost nine times earnings - which is hardly demanding. Buy for the income.

THE FIVE-YEAR track record of Hay & Robertson, a leisure wear and rag trade business, reads like something out of Monty Python, or a how not to ... of business. Disaster follows disaster as surely, it seems, as night follows day.

Quite why it has a stock market listing is something of a mystery. Turnover of pounds 673,421 for the year to last September was easily outstripped by losses of pounds 702,317.

Over the past five years, the company has not once made a profit. The dividend has been passed for at least the past six years; preference shareholders have not been paid a penny since 1965, and are owed a cumulative total of pounds 130,235.

So an open offer and placing at 47p a share, against Friday's price of 49p, to raise pounds 2.59m from the market surely merits an award for barefaced cheek. However, the move is the work of new management, so this could be a glimmer of light at the end of the tunnel. Or, for investors, it could be a case of throwing good money after bad. Moreover, costs for the exercise are considerable. The broker, Wise Speke, will pick up pounds 40,000. On balance, this is probably best left as a business school case study.

ANOTHER smaller company situation, this time in the adventurous world of mineral exploration. Minmet was once the corporate fiefdom of controversial businessman Paul Bristol. He resigned last September, when Jeremy Metcalfe took on the mantle of running the company. Mr Metcalfe has decided to pare back the business to its gold exploration.

Most peripheral assets have already been sold, and the company is weighing an offer for its tree company. It hopes to float its stake in a Russian electronic publishing venture on the Alternative Investment Market.

So what is left? Principally, its 59.2 per cent stake in Connary Minerals. The excitement here is the licence it has for some gold reserves in Portugal. It has already proved up 33,000 ounces of reserves, while there is, in addition, almost a million ounces of silver.

Total reserves of gold are close to 200,000 ounces, and could be significantly higher, while an unexpected bonus has come in the discovery of significant kaolin reserves. Since Portugal is a net importer of the stuff, which is used in ceramics and paper production, there is a ready domestic market.

It all sounds very promising, but as every gold miner knows, it is not finding the gold that counts so much - it is being able to get it out of the ground.

The shares, traded over the counter in Dublin, are at 11/4p. It is clear the company is on a sounder footing - the Portuguese prospect could bring in some real money, as long as a big partner to fund full-scale production can be found. Expect a switchback ride.