Steady Kleinwort is still in the sights

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The Independent Online
All the excitement over SG Warburg's mounting problems has obscured the relatively strong position of that other well-regarded minnow, Kleinwort Benson Group. Significantly, while Warburg's shares were plunging on Friday, Kleinwort's barely budged, losing a mere 1p to close at 627p.

Of course this is a far cry from the heady 693p peak reached in 1994 and the recent excitements regarding bids by all and sundry, more especially Dresdner Bank. But the prospect of profits to be announced on Thursday - expected to be down from £111m in 1993 to somewhere between £88m and £105m - will do nothing to dampen bid rumours, merely confirming that underneath its "terribly nice" laid-back image, Kleinwort is professional enough to cope with terrible market conditions that hit its rivals far harder.

Kleinwort must remain the principal target for any of the many European (or American) sharks anxious to buy their way into the heart of British merchant banking. Hang on for the ride.

REUTERS is on a high, as the profit figures for 1994 - to be announced on Tuesday - will undoubtedly confirm. They are expected to be over £500m pre-tax, against £440m for 1993. Although the shares, at 454p, are well below their 539p high for 1994, their recent surge has left them looking rather exposed. In its great days in the 1980s, Reuters rode the wave of expansion in international financial markets with considerable panache, to the great benefit of shareholders. But over the past few years, like many other specialists before it, Reuters has been diversifying - always a dangerous business when a company is used to market dominance, as it is not only in financial information but also in its historic role of providing news for newspapers.

Its recent deals to provide electronic news services to such demanding customers as Rupert Murdoch bring it into a much more competitive area where, historically, it has not been the leader. Steer clear.

THE Government's latest interference in the beer business is an ill wind that could blow further good for the handful of specialists who have got their act together and are exploiting the increasing market for "fun" pubs, "theme" pubs, and pubs that are more like cafes than traditional boozers. Grosvenor Inns fills all the criteria. It's the smallest of the specialists, with only 43 licensed premises. But, as Panmure Gordon points out, its smallness "is one reason why it has the lowest rating" compared, say, with JD Wetherspoon or Regent Inns.

Following encouraging interim figures, Panmure has upped estimates of future profits, pointing to the vastly increased profits from the Slug and Lettuce pubs after they had been refurbished to make them more like continental cafes. On Panmure's figures the prospective p/e for 1996 at 168p is a modest 13.2.

ALL THE recent activity in the DIY business (Sainsbury taking over Texas, etc) has obscured the prospects for Wickes, the most respected name in the sector, widely admired for its management and efficient concentration on the demanding, specialised, but reasonably profitable professional market. In 1994 the shares drifted steadily downwards and even the recent blip has left them at a mere 95p, well down from their 129p 1994 high. Despite a recent fall in sales of building materials, Wickes has its defenders. These include the widely respected John Richards of NatWest Securities, who forecasts that pre-tax profits for 1994, to be announced on Thursday, will jump from £17.5m to £29m pre-tax thanks to Wickes's more aggressive pricing policy, record expansion programme (17 new stores to take the total up to 95) and successful differentiation in the market. Despite a question mark over the recently reorganised continental business, the shares are still worth supporting.