Shares: Kenwood in a spin over sell-off

Kenwood Appliances (210p), after a dismal share price performance since its flotation in 1992, may come good, if only because of the emergence of the UK Active Value fund, which wants the group to put itself up for sale.

An informal approach from Pifco also provided a fillip for the shares, but Kenwood is determined to resist any such overtures, until "a firm and credible offer has been put forward". An extraordinary meeting on Monday is likely to see off the rebels, but Kenwood will have to work hard if it is going to address shareholders' longer-term concerns, after interim profits fell from pounds 7.4m to pounds 3.3m. But for the time being, the shares are best avoided.

Vardon, after a difficult spell, has begun to swing back into favour, with analysts positive after a visit to its health and fitness division, offsetting the gloom following disappointing trading at the Sea Life centres last year.

Down from a high of 135p in April, the shares have been edging back, helped by a positive second-half trading statement. At 95p, they now look cheap against the sector, and are a long-term buy.

The fizz has gone out of Cadbury Schweppes, the company carrying the flag for British hopes in the international soft drinks sector, and taking on the likes of Coca-Cola and Pepsi in the process. While the shares have proved a decent proxy for the market over the last six years, recent underperformance once again highlights the risks in its strategy. Granted its Dr Pepper/7- Up acquisition has taken Cadbury's on to the world stage. But at what cost? And the decision to sell its CCSB joint venture bottling business to its partner Coca-Cola, improves its gearing. But the strategy set by Coke and Pepsi, is to own the bottling for their beverages. The move has raised fears in the City that Cadbury will be unable to exert enough control over its business, when it relies on external bottlers, especially in the US. Meanwhile, 7-Up is in a gruelling head-to-head with Coke's Sprite.

Either way, hopes of strong growth look misplaced for now. The shares are still way above their two year lows - time to take the profits.

ASTEC (156p) is something of a City curiosity, a Hong Kong-based company quoted in London. But the electronic components group, with a large proportion of sales to computer makers, has been a superb investment. At its last interims, the group, valued at pounds 500m, pushed six-month profits up 32 per cent to pounds 13.1m.

The company sits on a pounds 38m cash pile, and is wondering what to do with it. A special dividend is unlikely, because of its 49 per cent owner Emerson, the US concern. But a bid cannot be ruled out, and in the meantime, the company should continue to motor. Buy.

Fountain Forestry will be an AIM tiddler when dealings commence on 19 December. Priced at 75p a share, the company, which offers forestry management services to private and corporate landowners, utilities and local authorities throughout the UK and on the north-eastern seaboard of the US, will be valued at pounds 6.6m.

Fountain Forestry will receive pounds 1.2m from the placing. The company announced full-year figures, to show sales up 25.3 per cent to pounds 18.8m. Profit before tax increased 12.6 per cent to pounds 723,000.

While margins are slender, and forestry is hardly the sort of business to suggest startling growth prospects, it has the advantage of offering safety in dullness.

Division Group has had a lacklustre performance since it came to the market in 1993, and the shares now trade at 52.5p, down from the 70p issue price. But the company could be finding its way out of the dark. Its virtual reality software for industrial customers is being touted as some of the best available. Computer-aided design vendors EDS Unigraphics, and Computervision, want to embed Division's products in their own systems, although the full impact from this is unlikely to be felt until 1998.

The company may also represent a tempting morsel for another company wanting to enter the less speculative end of virtual reality. A tentative buy.


Interims: Crest Packaging, Gibbs Mew, Howden Group, Jasmin, MFI Furniture.

Finals: Burndene Investments, Hunters Armley.


Statistics: November Public Sector Borrowing Requirement.

Interims: Mondas.

Finals: Chemex International, Eurotherm, Goldsborough Healthcare, Kunick, Securicor, Vaux Group.


Statistics: November retail sales, November unemployment, October average earnings, unit wage costs.

Finals: Dawson Hldgs, Freepages.


Statistics: November provisional M4, November vehicle production, November major banking groups' monthly statement.

Interims: Acatos & Hutcheson, Asda, Jones & Shipman.

Finals: Warner Estates.


Statistics: Final Q3 GDP, Q3 Balance of Payments.

Interims: Forminster, Meconic.

Finals: Kelsey Industries.

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