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Quick Group needs more capital
THE chairman of H. AND J. QUICK GROUP—Mr. N. Quick' has made it known that "permanent capital in some way or another" will have to be raised in the fairly near future. Rather more than a year ago the idea of making a "rightsissue was considered, but it was postponed because the then market conditions were not favourable.
In a reference to the group's present tight liquid position, Mr. Quick states that cash utilization will be helped by tighter stock and credit control. But this, he adds, will only partially better the position. So far as current trading is concerned Mr. Quick states that during the first four months of the present year this was satisfactory, but he warns that the year's ultimate profit is "extremely difficult" to forecast. He states that a large volume of business is currently being passed through an associate company.
Although profits cannot be brought into account until these transactions have been finalized, "we are building up deferred profit", Mr. Quick states. "which will increase our figures". At around their present price of 2s. 6d.--their "low" point of 1966— these 1 s. Ordinary shares yield an above-average 9% based on the latest dividend of 224-%; but it was a dividend that was covered with little to spare by earnings. Although the terms of the new fund-raising operation are not yet known, I feel the present market valuation is right for the time being.
When the results of AUTOMOTIVE PRODUCTS for 1965 were announced recently the price of these shares was marked down quite heavily following disappointment with the no-more-thanmaintained 10% dividend, despite the fact that sales were a record at 06.2m. Profitability was adversely affected by the currently all-too-familiar squeeze on profit margins.
In his latest annual review to shareholders the chairman, Mr. E. B. Boughton, states that costs continue to rise and that margins remain under heavy pressure. Mr. Boughton adds that during the early part of the present year there was increased activity in the motor industry, but because of general economic conditions the prospects for the year as a whole are less certain.
At their present price of 60s. ed. these £1 Ordinary shares yield 31% based on a dividend of 10%. The latest payment was covered more than three times by earnings. In my view they should be retained.
Martin Younger