Newspaper article The Journal (Newcastle, England)

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Newspaper article The Journal (Newcastle, England)

Share Watch

Article excerpt

Byline: By Aidan Dunstan

Although the name of the company may be associated with mid to upmarket hotels, the real driving force within Hilton Group is the betting business, which has recently accounted for nearly two thirds of overall group profit.

In the past Hilton has always hedged its bets, relying on the hotel business to be strong when the betting side was weak, and vice versa. Last year both operations did well, with hotel profits up 17pc and the gaming division, Ladbrokes, ahead by 28pc.

Ladbrokes is the world's largest off-track betting organisation and last year was also boosted by the introduction of Fixed Odd Betting Terminals in its outlets. These hi-tech gaming machines have led to explosive profit growth over the past couple of years but, having installed about as many machines as it can, the company is now looking to online gaming, especially poker, to take up the running.

On the hotels side, the company says that prospects for the industry are better than they have been for years and has announced that it is to sell up to pounds 400m worth of hotel property, returning most of the cash to shareholders. We believe that this is the first part of an ongoing programme to reduce the pounds 2.4bn owned hotel assets.

We have a price target of 350p for the shares and, on a price earnings ratio of 13.4 and a yield of 3.5pc, they look good value.

Johnson Matthey ( 930p

Johnson Matthey's main business revolves around platinum. The business is organised into four units: catalysts and chemicals, precious metals, colours and coatings and pharmaceutical materials.

The core business is platinum refining and making catalytic converters to filter car pollutants, although the more exciting growth potential comes from the company's research into platinum-based cancer drugs and fuel cells.

In March, Johnson Matthey issued a brief trading statement, which suggested that earnings growth in the current year would be ahead of 2004 and in line with market expectations. …

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