MONEY MATTERS
Page 87
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1964 Outlook Set Fair.
rRE was a general price advance by commercial vehicle a9d kindred shares during 1963, though peak prices were not in every case fully held. From this firm springboard the outlook for these shares during 1964 is considered by the market to be good. Respectful of the industry's 1963 home and overseas sales achievements, many brokers hold the view that the expected expansion of world trade, and of the U.K. economy in particular, will provide fertile ground upon which to increase sales still further. Such an increase should be reflected in earnings.
It is interesting to note that current share prices do not appear to discount prospects too far ahead. Yields are quite reasonable.' for example, the 51% offered by Dennis Brothers, the 41% available on Fodens (they have been a firmer market recently) and the 51% offered by Plaxtons all appear to offer scope. The cover enjoyed by most of the latest dividend payments is an additional factor not overlooked by investors.
The Stock Exchange has little doubt that the General Election will be the major influence on equities during 1964. While not completely escaping the effects of it, the commercial vehicle section of the market is not expected to be as vulnerable as some to the price gyrations likely to stem from this event.
In line with equities generally, buying interest in this section has tended to be more selective in recent days. Nevertheless, prices have been generally well maintained. Leylands were an exception and profit-taking clipped off quite a chunk of their recent good rise to around 100s.
United Carriers' operations would, the board states, be considerably stronger if the bid to secure York Ward and Rowlatt were successful. United have made a revised (and improved) offer of seven -of their 2s. Ordinary shares for every two Y.W.R. Ordinary shares. For some time Y.W.R. has supplied new vehicles to, and done other work for, United. Last July, when the quotation of United Carriers' shares was granted by the London Stock Exchange, the board forecast a final dividend of 20%. Now this is revised; a forecast of a final payment of not less than 221%, payable on a capital as increased by the Y.W.R. and previous acquisitions, is now made. An interim dividend of 11% was recently paid. There was business in United shares at around 14s, on the London Stock Exchange; this gives them a yield of about 4Z% on the latest forecast dividend—an indication of the market's assessment of the growth potential of this group.
Despite a downward profits trend shareholders of Associated Engineering have received a dividend of 131% during each of the past four years. Turnover and profitwise the directors feel confident, however, that the tide has now turned. A careful estimate for 1963-64--a continuance of present business trends has been assumed, anticipated cost rises and steps taken to meet them accounted for—" shows a material improvement on what we were able to achieve during the past year ". Nevertheless, the board's desire to see stronger cover for the dividend should prove a salutary warning to those investors already building hopes of an increased distribution in respect of the present trading year. I have little 'doubt this shadow was largely responsible for keeping the price under 14s. when they were made ex the
dividend. MARTIN YOUNGER.