New Issues May Provide Interest

Press, Volume CX, Issue 32395, 7 September 1970, Page 18

New Issues May Provide Interest

(By Our Commercial Editor)

The suspension from trading for L. and M. Oil (N.Z.), Ltd, shares was the most interesting event in a lively and steady share*market last week.

It is thought that there is no immediate precedent foi this action by the stock exchanges.

(Mr C. H. Benney), although in retrospect the situation would not have altered much; trading would no doubt have been resumed after his statement.

dend of 15 per cent would be better than 10 per cent. The old shares, which are seldom traded, last sold at 80c. Even when allowing for the weak state of the market, buying the. rights would seem to provide cheap access to a flourishing company. Amalgamated Batteries is another well established local firm with a cash issue soon. There can be no doubt but that it will be well received The company earned a very good profit last year, and the 10 per cent dividend was well covered. The terms of this issue are attractive. Peko-Wallsend will be mak ing a cash issue soon, and although not many investors may be able to take up these shares, for those who can the issue should be rewarding. Companies to float to the public for the first time are Alcan New Zealand, Ltd. Midland Coachlines, Ltd, and Capital Life Assurance, Ltd.

per cent a year on a worldwide basis.

Although a new company normally might find it difficult to acquire a share of this very competitive market. Capital’s link with the insurance broking firm of John Dee should enable it to achieve the targets set out in the propectus.

it is true that there have been suspensions before, but these have always been to protect the interests of Investors—to maintain orderly trading in a sitation which threatened to get out of hand, and to allow the market to calm down while the situation was clarified.

This does not mean that the exchanges are wrong in suspending trading now. of course.

If Mr Benney knew about Cook-1 on Wednesday, he should have said so. If he did not know, investors would like to know why he did not know. The stock exchanges have every right to underscore with a suspension their concern at this. No doubt the company will soon provide an acceptable explanation; meanwhile the stock exchanges have made their point.

John Dee is one of the promoters of the venture, and is thought to be writing about $6 million new business a year.

This time the suspension is clearly a punitive measure—the situation itself is cle»r enough; the Cook-1 well is dry. L and M Oil shares were ac tually recovering when the suspension was announced. It might have been better if trading had been suspended ■while awaiting the reply by I the chairman of L and M Oil

Apart from getting custom, a good actuary is the most important asset for an insurance company, to determine the risk on a statistical basis. But when those two conditions are met, an insurance company ought to be profitable. as management problems are confined to sticking to a budget. The prospectus forecasts a dividend of 5 per cent in the] second year, and this looks eminently reasonable.

New Cash Issues ! Whatever investors do, they should keep cash in reserve to be able to take up shares in some of the interesting issues which are in the pipeline. Waiting for these issues is likely to be a better policy than buying into the present uncertain market, which is still in downtrend, with no sign of reversal yet The rights of Brother Distributors, Ltd, are now being traded. This company has had an excellent year, and this year promises to be even better. The price of the rights last Friday was 20c, which makes the new shares—which are at par, 70c. At *'iis price the yield, on the forecast divi-

1 would commend without qualification the first two of these issues. Midland is analysed in the articles on the tourist industry, and Alcan will be discussed in a separate article later on. Either company should prove to be an excellent investment. Capital Life i s a somewhat different kettle of fish.

Issues, Calls Pending Amalg. Natt.—*2:3 cash issue of 100 c shares at 125 c, ex rights Sep. 7 MantheL—l:lo bonus issue: ex bonus Sep. 8 Peko.—l:lo issue of 50c shares at 700 c; ex rights Sep. 14 iA. Barnett.-*!: 2 bonus issue: ex bonus Sep. 28 ■allins.—l:s bonus issue; ex bonus Sep. 30 jCory-Wright.—l:6 Issue of 7J p.c. convertible notes. Details later .. .. Oct. 3 Capital Life.—Public float of 1.000.000 ordinary 50c shares at par. Subscriptions close .. Oct. 12 Alcan N.Z.—lssue of I.Bm 50c shares at 200 c. Details later. Midland.—Public float of ordinary shares. Details later.

This issue is only suitable for investors who can afford to wait for modest but probable steady growth, compensated by the opportunity of ground floor entry into a steadily expanding industry The insurance industry is expanding at the rate of 10