SPAULDING AND THWAITESMARKET ACTIVITY on the local JSE Index
continues to be high as investors pursue avenues to maximise earning potential.
Profit-making initiatives on the part of investors are particularly timely since the looming Christmas season is renowned for its ability to pull on resources.
However, investors need not undergo a cash crunch should they decide to grasp the opportunities to purchase stocks which are expected to pay dividends in the near future. In fact, several stocks, including D&G and JP, recently declared healthy dividends which can be used to offset the cash demands of the season. Of course, investors must ensure that decisions are underpinned by accurate information about record and payment dates, etc.
UPBEAT ABOUT THE PROSPECTS
RJR posted 14 per cent revenues at its half-year interval but the weight of increased operating and financing expenses resulted in 67 per cent lower net profits. The upsurge
in operating expenses stemmed mainly from costs associated with the launch of new TV programmes, and the acquisition and broadcast of exclusive events.
Non-recurring events related to the restoration of transmission systems necessitated by the passage of Ivan and the clustering of sites also contributed to higher costs. Similarly, additional loan obligations together with reduced liquidity resulted in 281 per cent reduction in finance income. Management subsequently made a rights issue which is expected to provide liquidity support and alleviate the Company's debt burden.
Notwithstanding the challenge seen in the review period, analysts are upbeat about the prospects of RJR over the medium to long term as operating expenses normalise and benefits from technology upgrades, new programmes and entry into new markets materialise.
Although Dyoll Group Ltd engineered a commendable turnaround since the start of the year an air of cautious optimism still hovers about the company's future performance. For the 9-month period to September, Dyoll realised 286 per cent increase in operating profit as gross revenues grew 4 per cent while operating costs shrank by 5.11 per cent. However, the resulting 27.8 per cent increase in net profit is argued by some as grossly understating the progress made by the general insurer, particularly in the third quarter which saw a successful conversion of $14.3 million losses into $25.1 million in net profits. While one lauds the achievement, it is worthy to note management's expectations of a difficult fourth quarter in which the claims and claim related expenses due to Ivan are expected to be accounted for. Be advised!
NO AMUSEMENT
AT PALACE
Recent newspaper reports stated that Palace Amusement Company will be closing its Island Life Cinema by November 30, 2004. Reports concluded that Palace was unable to retain its current cinema location in the Island Life Mall following the recent change in ownership of the mall.
This event is likely to compound Palace's poor operating performance highlighted by net profits falling 10.56 per cent for year-end June 2004 and plunging 87.4 per cent in the subsequent quarter. Palace's only hope of improving short-term profitability, if one is overly optimistic, rests with the sale of the beachfront property in Harbour View. Investors may wish to replace this stock with more viable options.
For further information on these and other stocks, please contact DB&G's stock brokerage department at 1-888-CALL DBG.
