Inchcape can motor out of decline

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The Independent Online
THE chart tells the story: over the past few months, Inchcape's share price has corresponded only too closely to the decline of the dollar against the yen. This is not surprising, given that Inchcape's most profitable business is the distribution of Toyota cars.

The decline has been compounded by recent gloomy statements and by management changes at the top. Nevertheless, profits for 1994, due out tomorrow, are likely to be down by only a tenth.

But all the bad news is in the price of 307p, which fails to allow for several positive developments - ranging from the yen weakening and increased Toyota production outside Japan to a continuance of recent healthy profits increases from Inchcape's other businesses. Worth a medium-term punt.

HAMMERSON has made all the right moves since new management replaced the company's veteran founder, Sidney Mason, two years ago.

Out have gone the notorious underperformers in Canada and Australia to be replaced by retail and office properties in France and the purchase of a package of properties from Postel.

But Robin White at NatWest Securities notes that this was a top-of-the- market transaction, and that the market may have been unduly gung-ho, valuing Hammerson, at 320p, at little more than a 10 per cent discount. Ignore tomorrow's juicy profit figures, which may correct recent softness in the shares, and continue to steer clear.

THE CIA is on the march. No, not the US intelligence agency but the London- based media buyer that buys space and time for the likes of DHL, Nike and Heinz. Late last year, it ditched Kleinwort Benson Securities as its broker in favour of the more aggressive Smith New Court, who last week took their new client round the hard-bitten Scottish fund managers.

That has trimmed a few pence off the shares, at 137p, but the prospective p/e ratio for this year is 18.4, reasonable for a company with 16 years of unbroken profit growth as the advertising cycle swings into gear. SNC cautiously makes the shares a hold, but the brave may be rewarded.

AZURE GROUP, the swimwear and sports equipment distributor, which raised £825,000 from shareholders only last autumn, wants to pass the hat round for as much as £3.6m for a radical diversification. Shareholders will be asked on Friday to approve a plan to branch out with the takeover of Medical Supplies International, which has a 74 per cent stake in a project to build a syringes factory in Hungary.

Jim Slater, the investment commentator, his son Mark and clients still hold 13 per cent of the stock, but non-shareholders should beware until there is a clearer picture of project.

THE only pure tobacco play on the London market is Rothmans International and a very good punt it is, too. Analysts automatically associate tobacco stocks with the fearsome problems faced by the industry in Anglo-Saxon countries.

But the market has now realised that Rothmans has no exposure at all in the US and very little in the UK, while its main brands such as Rothmans and Peter Stuyvesant are big in continental Europe and growing very fast in Asia. The price has risen by two-fifths to 488p in the last year, but the cash element is worth more than £1 and is rising rapidly as befits a cash-generative business. One to lock away.

TOMORROWS LElSURE, inwhich Wiggins Group took a 29.9 per cent stake in December, is expected tomorrow to announce its first purchase since restructuring - the 52-bedroom Hellaby Hall hotel in Yorkshire for £2m. At 10p, the shares are worth picking up.