TDG's expansion bid for Williams Hudson
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THE latest effort to expand the Transport Development Group is a take-over bid for Williams Hudson. The directors of the company now being wooed recently came in for criticism by the Danziger brothers. News about the precise details of the bid are at this moment awaited. But to be going on with the price of Williams Hudson Ordinary shares of 5s. each were marked-up 2s. 6d. to 13s. 9d. immediately following the initial news.
If asked for my advice about what to do with Dennis Brothers shares it would be keep them if you hold them; buy a few if you don't. Because the more I peruse the latest pieces of information from this group the more convinced I am that here is a good long-term recovery prospect.
The directors are planning a significant degree of expansion. To this end they are not disposing of any of the industrial property currently surplus to needs. Shareholders may eventually see further long-term finance raised, but the board is not going to talk about this until the group is back firmly on its feet.
How long this will take is currently occupying the guessing mechanism of the City. There is encouraging news to be going on with: the order book is officially described as sufficient to keep Dennis fully going for "many months ahead". An "energetic sale policy" has been set in motion; one of the aims behind it woul, appear to be improved sales of fire engines and vehicles catering fo municipalities to markets overseas. Profits during the current yea are expected to show an increase, but these may to some exter be offset by a full tax charge.
Nevertheless, the aim is a restored 12 per cent dividend. At the current price of around 16s. 44d. these 10s. Ordinary shares yid a meagre 3 per cent based on the latest 5 per cent dividend. But th fact that the yield is so meagre clearly points to the market's opt mism about the growth prospects.
Cautious optimism about the group's tyre section—new ordci from Ford and Leyland should help boost output and, it is hope, profits—but continuing unprofitability by the subsidiary supplyir footwear soling materials would seem to describe Avon Rubber near-term prospects. Chairman Mr. C. M. Floyd reports th efforts to increase efficiency are showing benefits; they will intensified. But he warns that it may be difficult to maintain ti 1965/66 profit level in respect of the current year.