Rivals poised to make a dive for Dolphin

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The Independent Online
As a member of a rapidly consolidating sector, Dolphin Packaging has all the hallmarks of a prime takeover candidate. Rival firms such as MY Holdings (tipped here last week) have run their slide rules over the figures. Last month's excellent results only confirmed its potential. Pre-tax profits leapt 47 per cent to pounds 3.29m in 1995. Broker Greig Middleton has recently put out a note confirming the shares (155p) as a buy.

Manganese Bronze, the maker of the black taxi cab, has been on a roll for the past few years as it recovered from recession. The shares have surged ahead to 297p, from lows of 140p.

The ubiquitous black cab continues to contribute the lion's share of sales and profits, and MB has an 80 per cent market share of the purpose- built taxi market. Favourable legislation will also help sales. For example, all cabs must have wheelchair access which, stockbroker William de Broe estimates, means 5,000 black cab sales between now and 2000. Meanwhile, volume has almost doubled from the low points of the recession, to 60 cabs a week. Total turnover could reach pounds 102m this year, to produce profits of pounds 6m. That leaves the shares on a fairly undemanding p/e of 12 times current year earnings. Despite gains in the share price, this stalwart should have further to go.

As the long and remarkably dull affair that has been Rentokil's bid for BET (202.5p) draws to a close, it is time to reassess the future for Rentokil. Clive Thompson has produced a remarkable creation in the services group that has enjoyed annual growth of 24 per cent over the last 14 years. But what happens next? Well, if he fails to win BET (unlikely, but still a possibility), then investors will dive for cover. On Friday, fund manager M&G threw BET the slimmest of lifelines, when it said it would back the incumbent management. If it slips out of the noose, Mr Thompson's credibility will be knocked, and investors will worry about where future growth can come from. If he wins, then matters become more complicated. BET shares have been as dead as a doornail for years. It will take a massive effort to turn the business around - and match Rentokil's rates of growth. BET also suffers from poor cash flow. But apart from stripping out overheads - pounds 20m just for closing the West End head office in Stratton Street - it is questionable if Mr Thompson will change the business at the fundamental level that is required to justify Rentokil (352p) retaining its premium rating. Sell.

Corporate Services Group is moving up to a full stock market listing. The company has been an unblemished success story since its shares were floated in 1993. From 14p, they now stand at 142p. The last few weeks have seen a strong climb, spurred on by its acquisition of the privately held Blue Arrow group for pounds 47.8m. But investors tempted to take a closer look for that reason should hold off any purchases until more facts emerge about a problem at Greenwich. There are allegations that the company's Sight and Sound business has been falsely graduating students from its vocational courses, which are backed by government funding. The company has ordered an investigation, but until further details emerge, the shares are best avoided for the time being.

The fortunes of distiller Macdonald Martin rest largely on the growing interest in malts, and in particular, its best-selling brand, Glenmorangie. Scotland's top malt, it is the fourth biggest in the world. Although expensive, the shares look a decent bet. Long term, its main strategy for growth is in own-label sales to supermarkets, and to emerging markets.

Even modest success will generate big returns for the company. It is already selling 35,000 cases of whisky a year in India, although it has yet to break even. And stockbrokers BZW expect aggressive growth in own- label sales. Sales of pounds 39.2m are forecast this year, to produce an operating profit of pounds 8.24m. The prospective p/e on the A shares, at 633p, is then around 18 times - quite pricey but then so are all good malts.

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