Investment: Identity crisis at Hambro

HAMBRO COUNTRYWIDE, it seems, is unhappy with its identity. Traditionally it has been seen as a "souped up" estate agent. But directors are now desperate to get away from the estate agency tag and want the business to be redefined as a life office or "other financial".

Should shareholders care? Part of the company's identity crisis may stem from a desire to disassociate itself from the housing market. Between 1993 and 1996 its shares underperformed the market by up to 40 per cent as the effects of the downturn hit. As the housing market picked up between 1995 and 1997, so did its shares. Yesterday, its price was marked down by more than 5 per cent, from 96p to 90.5p, as the City digested a fall in revenues from housing transactions.

The company has deliberately looked askance at a desperate battle for market share among some agents, which have dropped fees on house sales to as low as pounds 500. Hambro Countrywide, keeping its fees at around pounds 1,400, conducted transactions on just 40,568 properties in the first six months, a 10 per cent fall. But most of Hambro Countrywide's profits come from other financial services - selling life insurance and pensions through its estate agency.

The trouble is, few people go into an estate agent to buy life insurance unless they are also buying a house. So even this business is vulnerable to the housing cycle.

Analysts forecast earnings per share for 1998 of 10p, giving a forward p/e of nine on yesterday's close. For housing pessimists, though, this still looks unattractive.