An Instant success in Scotland

CITY TALK

FOR those who appreciate Scottish canniness, convenience stores group Watson & Philip, based in Dundee, may make a suitable addition to the portfolio. Recent good interim figures confirmed the shares as a buy for broker Bell Lawrie White. The National Lottery has proved a boon, with a pounds 450,000 contribution to first-half profits. The Instants game should push weekly average Lottery takings per store to pounds 5,000 from pounds 3,800. Full-year profits could reach pounds 17.5m and although the shares, at 438p, may pause for breath after a recent good run, long-term prospects look appealing.

MECONIC, the drugs company specialising in opiates, had an unambiguously successful stock market debut. From a price of 135p when it was floated three weeks ago, the shares soared to 175p, before dipping back to 168p. As would be expected, the first interim results were exactly in line with the prospectus. Now the market must decide how much more growth is in prospect. Although it has a strong position in its niche area, it remains to be seen if the current price, representing roughly 17.5 times 1995 earnings, offers much scope for further gains. Hold.

KENWOOD Appliances, a household name in kitchen appliances, will announce full-year figures tomorrow, two years on from its stock market listing. Over the past eight months, the shares have performed abysmally, and now trade at an 18 per cent discount to the market. The City's doubts stem from two recent acquisitions, the most significant of which was the pounds 22m purchase last November of Italian Ariete, a manufacturer of espresso coffee machines, steam irons, and food preparation appliances. The shares, at 268p, are below their issue price of 285p, and well off their high of 380p. But the group offers substantial potential, and its brand name is an undoubted plus. If pre-tax profit is near to pounds 15m, there should be scope for a rerating. But any hint of trouble may prompt more sellers to emerge.

WEDNESDAY is the first closing day of the offer by GWR for tiny Chiltern Radio. It could be all over, as shareholders representing 52.25 per cent of its capital have already indicated they will accept GWR's all-share offer of 2.38 of its shares for each Chiltern share, to value the group at around pounds 19.3m. Chiltern has been holding out for a cash offer, and chairman Peter Burton says there are four possible white knights in the offing. But time is running out, and it looks like put up, or shut up; shareholders should sell now. There are other, more exciting plays in the sector than GWR, while the chances of another offer materialising at this stage are slim. Meanwhile, Chiltern's price has been slipping back, and now stands at 300p. If the bid goes through, there will also be an overhang of GWR stock for the market to digest.

FURTHER grief in store for WH Smith, reckons analyst Tony Shiret at broker BZW. The latest difficulty, following hard on last month's profits warning, is news that Sainsbury is about to begin trial discounting of magazines. The supermarket chain will start off with 5 per cent discounts for Cosmopolitan, Bella, Ideal Homes and Take a Break. This, predicts Shiret, is only a taste of things to come for the newsagents' chain, which faces many more challenges. Sell.

MOTORWORLD has announced a one-for-five placing at 235p to fund the pounds 6.15m purchase of the Charlie Brown retail chain. Interim profits edged up 8 per cent to pounds 1.9m. There is concern that the acquisition will dent second-half figures, while it seems there are also problems over its trading agreement with Montinex. But longer term, there are cost-cutting opportunities to be had. Take up the rights.