City File: Reuters riding high on multimedia bandwagon

WITH all the clamour for multimedia companies, it looks like Reuters Holdings is back in favour. Paul Norris at BZW reckons it is TCI, Bell Atlantic and Paramount all rolled into one.

That sounds a bit excitable. But with oodles of cash, a superb data network, offices in places many media groups have never heared of and a television news company, it is a great prospect. At 1,634p the shares trade at 23 times next year's forecast earnings. As Reuters is more likely to be buying than selling in the worldwide media shake-up, this looks pretty demanding.

DEALINGS began last week in the warrants of two of the new Lloyd's underwriting companies, Angerstein Underwriting Trust and Abtrust Lloyd's. Their strangeness has tempered investor enthusiasm, providing opportunities for more adventurous souls.

Both allow holders to convert into their respective ordinary shares at pounds 1 a time, and both carry gearing of around 250 per cent. Both ordinaries are trading at around 92p, while the warrants are about 38p. Yet Angerstein's warrants have a seven-year life and Abtrust's 15 years. Brokers Dunbar Boyle and Kingsley reckon they are worth between 50p and 60p, which gives a fair margin for buyers at the current prices.

BREWING isn't good for you. That is the likely message to come from results due this week from two large drinks groups, Bass and Grand Metropolitan. Both are likely to be saved by their (fortunately substantial) other activities.

Profits at Bass are expected to fall from pounds 556m to pounds 500m for the year to September, thanks mainly to 8 per cent declines from brewing, pubs and retailing. Best performer was probably leisure, which includes bingo and ten-pin bowling. The other source of cheer is Holiday Inns, where nearly 90 hotels were added to the international franchise network.

Although Kenneth Clarke may not do the brewers any good this week, Bass hopes to squeeze more profits from its pubs from installing electronic point-of-sale machines behind the bar. At 477p, the shares yield a useful 5 per cent.

This is a full point better than Grand Met, which also reports next week. Investors may prefer to wait until they see what the new chief executive. George Bull, can do.

Mr Bull faces a continuing problem with the Inntrepreneur pubs division, and the loss of US rights to Absolut vodka, with its absolutely fabulous pounds 35m profits. But he could be saved by his old business, IDV, now accounting for half the group's profits - which could be down by more than pounds 100m to pounds 750m. This year J&B Rare could topple the long-time Number One Scotch, Johnny Walker - and IDV has half a dozen vodka brands, headed by Smirnoff, to help replace Absolut.

SHARES in Benson Group, the Welsh engineering company, have been lacklustre since the chairman told analysts to tone down their forecasts a few months ago. But interest is reviving since the company recently disclosed that it has become a 'preferred supplier' of boilers to Texaco, the US oil giant, and has received a contract from Ford to convert its Countryman transit van to four-wheel drive.

These deals should perk up profits that rose from pounds 915,000 to pounds 1.9m in the year to May and are forecast by the brokers Bell Lawrie White to go to pounds 2.5m in the current year. At 16p, the shares are selling at only 12 times 1992/3 earnings.

AFTER nearly going broke three years ago, the Casket clothing group has grown into Britain's second-largest bicycle maker after Raleigh. Last week, it paid pounds 2.3m to enter the lucrative German market by buying Heidemann, a high-quality local manufacturer that made profits of pounds 1.5m on pounds 20m sales last year - figures that the new owners could easily improve by taking the German firm into children's bikes.

Casket used the opportunity to raise pounds 4.5m through a share placing at 36p, compared with the 40p market price. Even before this deal, Casket's profits were expected to hit pounds 4m in the year to March, compared with pounds 2.8m last time and pounds 2m in 1991/2.

They look good value on a prospective multiple of less than 10 - and will look even cheaper when and if the management ditches the loss-making clothing side.

TELSPEC looks worth following when its flotation price and profit forecast are announced on Thursday. The group designs and makes advanced telecommunications equipment to speed up existing networks for a classy customer list including BT and Deutsche Telekom, and founder-chairman Frank Hackett-Jones sees great prospects in the Pacific Rim.

In calendar 1992, Telspec made profits of pounds 3.4m on pounds 18.2m sales, suggesting the shares will be a good way to ride the telecoms boom without getting bogged down in one of the industry's titans. Lord Sharp, the canny former head of Cable and Wireless, has given the fledgling his seal of approval by joining the board.

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