Share tips right from the top

CITY TALK

Our chart on directors' share purchases features a positive signal for Ewart, a small, Belfast-based industrial and commercial property developer and leaser. Last Monday chief executive Barry Gilligan bought 20,000 shares at 60p each, to take his total holding to 63,000 shares - an increase of almost a half. As he owns options on 420,000, of which about half are at exercise prices of between 43p and 46p - that is, he's already quids in - it seems over-egging the cake to buy in the market. So why do it?

"We think this business has excellent prospects," responds Mr Gilligan. The last net asset value was 63p a share, leaving a slight discount to market. "We don't think that is justified," he says, "given there isn't a single non-performing asset in our group."

Some 70 per cent of its assets are on the UK mainland, while it has promising developments just completed or under way in Northern Ireland. These include a 150,000 sq ft new headquarters for BT Northern Ireland and a Hilton Hotel with Ladbrokes.

Ewart seems to have weathered the vicissitudes of business in Northern Ireland remarkably well, with sales rising from pounds 3.7m in 1992 to pounds 7.86m at the last set of figures for 1996. Pre-tax profits rose from pounds 1.15m in 1995 to pounds 1.8m in 1996. Even stripping out a jump in investment income to almost pounds 300,000, like-for-like growth looks very good. Despite this, the share price has been volatile, declining from a high of 75p in 1994 to 60.5p - hardly a stellar performance.

However, investors might like to take a closer look, given the company's solidly improving track record and Mr Gilligan's own vote of confidence.

On a more negative note, Alan Kennedy, a non-executive director of library supplier and newspaper wholesaler Dawson Holdings, decided to sell a substantial part of his stake. He off-loaded 7,000 shares, at pounds 25.25 each, to reduce it to 15,811. Dawson shares have risen steadily since they were floated on the AIM at 500p in 1995. Last September they were at pounds 17. Perhaps Mr Kennedy knows a good time to take profits when he sees one.

Tomorrow Chiroscience (412.5p), the biotech stock, holds a research and development update for analysts. Some positive news is looked for on its local anaesthetic, Levobupivacaine, as well as progress at its US acquisition Darwin, the genome business in which software king Bill Gates held a stake. Darwin has a wealth of potential in its intellectual property.

As interesting may be the bearing the presentation has on Medeva and its main product, Ritalin, the attention deficit disorder drug for children. Chiroscience is working for Medeva on a new variant, which may prove more effective

Rebel investors at Christian Salvesen (321p), the food distributor, who speak for some 2 per cent of shares and are fighting a company break-up by management, briefed analysts earlier last week. Salvesen has a large family ownership, and the rebels claim they have won the backing of 14 per cent of shareholders - suggesting at least some family support.

In which case, will Hays consider another bid for the company? Hays withdrew last time, because it did not want to be involved in a hostile situation. However, if the rebels prove their mettle, Hays may be tempted. There could be developments later in March: watch this space.

It is gratifying to see that, after recommending Quiligotti last week, shares rose a reassuring 21 per cent. The rise is justified, and further gains can be expected in due course, but at these levels, the ceramics group's potential is better reflected.

Up among the blue chips, Williams Holdings this weekend posts its offer document for Chubb. An interesting comparison analysts may care to make is with other security companies as Williams' activities become more closely focused. If it wins Chubb, security will represent almost 40 per cent of turnover. With a good international spread in this arena, it is instructive to compare Williams to some of its international competitors. Tyco of the US trades at a forward PE of 23 times earnings, or a 30 per cent premium to the market; Assa Abloy of Sweden on 37 times earnings, or a 60 per cent premium, and Secom of Japan at 34 times, again a 30 per cent premium. Williams' PE is 13.5 times earnings, an 11 per cent discount to the market.

This may point to the sort of re-rating that could happen if institutions look at the business as something more than a conglomerate. Williams was seeing the institutions this week, and its shares closed at 319.5p, having recovered under pounds 3 after the bid was announced.

RICHARD PHILLIPS

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