Rising sun shines on fund manager
Sunday 07 January 1996
All well and good, but will UK investors benefit if Tokyo continues to surge? A good bet are shares of fund managers with substantial exposure to the Japanese market and the Pacific Rim, which will also benefit from any upturn in Tokyo's fortunes.
The likes of Schroders and Mercury Asset Management have sizeable Far Eastern operations, but their international businesses are sufficiently diversified to reduce the sizzle from any sustained rises in Asia. Not so Edinburgh Fund Managers. Its latest report and accounts showed 9 per cent of funds under management were invested in Japan, with a further 23 per cent in the Pacific region - the second largest exposure after UK holdings of 49 per cent. The shares have been under pressure over the last year, down from 730p to 668p. Much of this has been prompted by a decline in funds under management to pounds 3.3bn from pounds 4bn in 1994. However, a recent bounce back from 657p confirms the market is abreast of recent events. A well-managed company, EFM has rarely put a foot wrong in terms of investment strategy. And as an independent business, there is always the possibility of a bid. Buy.
ASPEN Communications, the direct marketing, print and media group, has just purchased Blueprint, the eclectic architectural and design magazine, and Tate, an upmarket art magazine. It paid the previous owner a total pounds 165,000. Aspen has struggled to retain a market rating after profits collapsed in 1991, with a further setback in 1993. That leaves it with something of a patchy track record, but there are signs it is making a decent recovery. In September, the company posted a handsome 62 per cent rise in interim pre-tax profits, to pounds 1.63m. The second half looks to have been equally fruitful, and the shares have been on a steady rise since then. At the current level of 239p, however, they remain on a 20 per cent discount to their peers. The limited downside justifies a "buy" tag.
ALTHOUGH the cold snap bought some relief to British Gas (251.5p) as sales soared, there will be little respite for the company this year. For a start, the cold period was all too brief to make much difference to the immoderately warm year we have experienced. And although signs are emerging that it will be able to renegotiate its troublesome North Sea contracts, it now faces full-scale competition in its main business, the domestic supply market. Steer clear.
NEWMAN TONKS, the architectural products business, with items from doors to security equipment and plumbing, does not inspire with its growth prospects.
But management has been hard at work, upgrading products, improving their appearance, and lifting service levels. The benefits of this are unlikely to be felt until much later this year at the earliest. And profits growth will be pedestrian. Full year pre-tax profits in 1995 are unlikely to come out much above pounds 18m - pounds 2m less than in 1994. There may be some recovery this year, but hardly enough to give shareholders lottery-style returns. Yet at 129p, the shares are a buy on a decent yield of 6.9 per cent. A series of disposals has left a sharper, more focused group, and there has been good growth overseas outside Germany and France. On a forward price earnings ratio of a little over 12 for 1995, the shares offer good value.
ANOTHER share for those willing to brave the wild frontiers of Russian oil and gas. Dana Petroleum is joining the London Stock Exchange through a placing of 145.2 million new shares, with a combination of an open offer and an intermediaries offer. At 7p a pop, it hopes to raise some pounds 16m.
The company currently commands a IRpounds 18m price tag on the Irish Stock Exchange's Exploration Securities Market. Dana's attraction is that the risk for a small, independent oil company lies not in exploration, but in developing the fields in Russia it is already interested in. A speculative buy.
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