Islands investment

Busines and Development

If you've cash to spare now seems the time for Islands investment

By a staff writer

With Islands produce such as cocoa and copra currently fetching high prices, and with shares in Islands trading and plantation companies paradoxically selling for unusually low prices, now is probably one of the best times for many years for adding Islands stock to your investment portfolio.

The reason that Islands stock is available at virtually bargain prices is that Australia is now enjoying a mining boom, and many investors are putting the bulk of their money into nickel, oil and iron ore prospects. As a result, interest in the traditional blue-chip leaders such as Burns Philp and Co. Ltd. and W.

R. Carpenter and Co. Ltd. has waned. , , Burns Philp, with extensive and profitable copra and cocoa holdings, were in the unusual position in late January of seeing their $1 shares drop to their lowest figure for two y ears —s3.4s compared with $9.95 for their $2 shares in January, 1966.

The 50c shares of W. R. Carpenter, which has similar interests, were down to $1.95 in late January com pared with $3.75 two years ago.

Bumper prices

Shares in other Islands trading and plantation companies were equally depressed.

Meanwhile. Islands copra and cocoa were fetching bumper prices.

The copra prices are fixed by the individual territories, while cocoa prices depend largely on fluctuations for Ghana cocoa.

Prices for first grade copra in Fiji until January 28 were fixed at £F92/17/6—a rise of about £F3S a ton since last October and the highest price that Fiji copra has commanded since at least 1957.

Produce experts said they couldn’t remember when Fiji prices were so high although some had the notion that a short-lived boom following World War II brought prices of about £FIOO a ton.

In New Guinea in early January the Copra Marketing Board increased prices for copra by $lO for all

grades, and hot-air copra rose to $136 a ton —New Guinea copra’s highest price for nearly two years.

New Guinea growers will also re ceive a bounty above these prices at the end of 1967-68 for every ton of copra produced.

Prices for New Hebrides copra, despite its low-grade, reached $lOO a ton in December and have since maintained this level. It is the highest peak for five years.

Copra doing well

In Tonga, where both Burns Philp and W. R. Carpenter have trading interests, prices for first grade copra rose to STIS3 a ton in January. This is a STS4 increase on prices for last October. Second grade Tongan copra also rose in January, fetching STI2I a ton. Interesting—considering copra output in Tonga for 1967 was a record (story page 29).

Western Samoan copra prices rose in December by about SWS2O per ton for each of the three grades.

First grade is now worth $W5116.50 per ton.

Solomon Islands copra has main tained its current level —$120 per ton for first grade—for some time.

Present cocoa prices are not as spectacular as those for copra, but they are unusually healthy. New Guinea, Western Samoa and Fiji here stand to benefit most.

First quotes for in-store cocoa at Rabaul have been consistently fetch ing prices in excess of $530 a ton over the past three months. Cocoa sellers told PIM many lots of cocoa were sold with a $6O premium above this figure.

Burns Philp, with extensive copra and cocoa holdings in both New Guinea and Fiji, has a stated $4.15 asset backing per $1 share. Many

investors believe this is a conserva tive figure in view of the company’s huge investment portfolio.

Also the company has a generous bonus policy (last bonus was in 1964-65), and last year’s profit of $4 million-odd more than doubled the $l.B million distributed in dividends.

Burns Philp (South Seas) with its main interests in Fiji, will benefit from higher produce prices also.

Last year stock exchanges valued this firm higher than its parenl company but in January its $2 shares were selling for $3.35—10 cents lower than Burns Philp and Company Ltd. shares.

These shares have an even highei asset backing than the parenl company’s.

W. R. Carpenter, with its desicca ted coconut and tea interests expec ted to bear fruit in coming years hit a low of $l.Bl on Australiai stock exchanges late last year.

The company has increased it; dividend to 16 per cent, for its 5( cent shares and directors have statec that conditions in the current yeai are better than in 1966-67.

Another Islands leader on stock ex changes Steamships Trading Com pany—was probably the best bm of the lot at 56 cents in late January Steamies’ shares steadfastly refuse t< recover to their former $1 status o last year.

The company’s $BOO,OOO hotel a Lae has opened promisingly and witl the current dividend of 10 per cent and an asset backing of $1.19 pe share, Steamies’ offer a dividend yieh of some 8.9 per cent. —far above B 1 or Carpenter.

Stand to benefit

Smaller plantation firms such a Bali Plantations, Dylup Plantations Plantation Holdings, Makurapai Estates and Choiseul Plantations al stand to benefit from the highe produce prices.

These public firms have extensiv cocoa, copra, rubber and cattle in terests throughout the New Guine mainland and the New Guine: Islands.

They all give excellent divider yields and some will undoubted! raise payouts if copra and coco prices stay high for the next fe\ months.

Dylup Plantations with cocos copra and cattle holdings west o

Madang, pay 12i per cent, on 50 :ent shares currently selling for only 58 cents —resulting in a yield of about 10.8 per cent.

Plantations Holdings and Maku ■apau Estates shares are both valued at below par while the companies 3ay eight and 10 per cent, dividends, fhe two grow cocoa and copra.

Bali Plantations had a big profit all in 1966-67, but directors are con ident things will be much better in he current year. A 10 per cent, lividend is maintained and with the hares selling at 54 cents with an isset backing of 78 cents, they are till a good buy, Choiseul Plantations, with its in erests in the rich Bougainville area ind the backing of Burns Philp, is *lew Guinea’s biggest purely planta ion firm whose shares can be bought m stock exchanges.

Profits for 1966-67 exceeded 1500,000 and will certainly go higher or the current year. This fact will lean an almost certain increase in he company’s 16 per cent, dividend.

lapanese interest

n Fiji bauxite

Nippon Light Metal Company, of apan, is expected to ask the Fiji Jovernment for permission to mine auxite in Vanua Levu and set up a iji subsidiary with a capital of U 530,000 by June, according to a from Tokyo in December.

The Nippon Company has made a vo-year survey of the bauxite de osits and has estimated there are six lillion tons of exploitable tribydrate auxite resources with 50 per cent, lumina content.

If given approval to go ahead, the impany hoped to start shipments to ipan from Fiji in late 1970 at the ite of 200,000 to 300,000 tons a ear, the report said.

: iji gold output' falls

Emperor Gold Mining Co. NL, ijian goldminer, reported in late muary a sharp fall in gold produc on for the first three months of the irrent financial year.

Despite a significant increase in the uount of ore treated by the com my, gold production fell nearly 12 ir cent.

Directors said that 76,038 tons of 'e was milled as against 71,800 tons the same period of 1966-67, but fld recovered was down from 5,773 oz to 22,765 oz.

However, with new financial assist ice from the Fiji Government, mperor will be able to carry out creased exploratory and develop ental work.

Big cattle project

for NG Industries

Five seven-eighths Brahman bulls, bought in Queensland recently for $3,900, will be imported into New Guinea soon as part of an ambitious cattle-breeding plan by New Guinea Industries Pty. Ltd., a Lae-based meat-supplier and sawmiller.

The company will also bring in 140 other breeding cattle in February to graze on Munum and Narakapor, its two former plantation properties less than 30 miles outside Lae.

With 500 Brahman-cross cattle already on Manum and Narakapor, New Guinea Industries hopes to have both properties fully stocked by 1970 with 1,500 breeders and another 3,000 head of cattle.

Businessman Giuseppe Zavattaro and several other businessmen formed New Guinea Industries in 1945 with a small trade store in Lae and the Rising Sun goldmine, on the Upper Watut, bought from Mick Leahy, Soon afterwards, the store was closed to concentrate on the mine, which, in 1952, after much expense and trouble, proved unworkable.

In 1948 New Guinea Industries was given the franchise to transport all Vacuum Oil petroleum products in New Guinea, Two ships were bought—the 370ton Erica and the 1,000-ton Vina— and money was made plying fuel supplies at a time when bulk oil de pots had not been installed.

Narakapor, a 500-acre mixed pro duct plantation 18 miles from Lae, was bought from Joe Lorraine in the 1950’5.

Timber from Narakapor supplied a small sawmill the firm set up in Lae and more timber was bought from other plantations in the Markham Valley.

In the mid-1950’s the company’s petrol-carrying business dropped off when bulk installations were installed

at major NG towns. Soon afterwards, in 1958, one of the company’s ships exploded in Wewak Harbour, and the business which had “paid the way” for the company for about 10 years lapsed.

Munum, a plantation seven miles from Narakapor, and bigger, had meanwhile been bought and about 1,600 acres of peanuts were planted.

Cattle on a small scale and some cocoa were added to both properties.

Then in 1960 the company was granted a timber lease of 6,000 acres 20 miles from Lae, on the road to Bulolo. Today this lease has grown to 24,000 acres.

When the government sawmill in Lae closed down in 1960, New Guinea Industries’ mill capacity was increased to fill the gap and the tim ber business has flourished ever since.

The company’s mill became the biggest in the territory for a short time in 1965 when it produced 30,000 super feet per day. Meanwhile, Lae became NG’s biggest timber pro ducer.

Profits were ploughed back into cattle and cash crops. However, over the last three years, peanut crops as elsewhere in the Markham, have been less profitable.

The company’s present plans are to turn their two properties com pletely over to cattle in 1970. Guaran teed markets for beef are available in Port Moresby, the Highlands, Rabaul, Lae and Madang.

Other projects of the company in clude the completion of a $400,000 office block in Second Street, Lae, due for completion early this year.

Eighty per cent, of the office space has already been booked New Guinea Industries’ head quarters will remain on 39 acres at Milford Haven, two miles from Lae.

• Three of the Brahman cattle being imported into P NG by New Guinea Industries.

'-NG transport

urvey approved

The Governing Council of the nited Nations Development Pro amme (UNDP) has approved a le-year transport survey in Papua “w Guinea.

The purpose of the survey is to aw up a transport development ogramme and to establish the ganisational and technical basis for ective transport administration in ; territory.

The survey is expected to cost a :al of 5U5596,600. The UNDP ocation is $489,600; Australia will )ntri b u t e the equivalent of 07,000.

The survey will be carried out by ; International Bank for Recon uction and Development (World nk).

IZ prices annoy

Western Samoans

Hopes that devaluation by New aland would result in a lower cost living in Western Samoa have not ;n realised, according to PlM’s >ia correspondent.

He says that the export prices of my New Zealand goods have risen sharply since devaluation that ; Apia Chamber of Commerce :ided in January to protest to the w Zealand Trade Commissioner aut what they considered un

tenable profiteering.

Samoan businessmen were further loyed by the fact that Samoa was ng discriminated against in that w Zealand exporters were quoting /er prices to Fiji and elsewhere, rhe manager of one of Apia’s gest stores said that New Zealand :ter had gone up 24 per cent., at and milk products between 10 1 15 per cent., and timber about per cent. said New Zealand canned >ds, biscuits and chocolate were v more competitive with Aus lian products but he expected that se, too, would soon rise in price. \s a result of the price rises, he 1 other Samoan businessmen were estigating sources of supply in stralia and Europe for goods viously bought from New Zealand.

Because margarine from England h 10 per cent, butter content was v very much cheaper than NZ ter, he predicted falling butter SS.

Jamoa’s Minister of Agriculture, ifili Time, was irate at an attempt

by the New Zealand suppliers of banana cases to increase their price by 20 per cent.

“Despite the poor service we are getting from New Zealand and the trouble over the price, we would prefer to get our cases from New Zealand because New Zealand buys all our bananas,” he said. But he warned that if a settlement could not be reached, Samoa might once more switch to Portugal for cases as she did last year. The Portuguese cases proved to be of satisfactory quality and cheaper.

In all the trouble over rising prices, Samoa’s Controller of Customs and chairman of the Price

Tribunal, Mr. V. Brebner, saw one consolation.

“Just think what would have happened if we had devalued too,” he said. “We would have found it almost impossible to live.”

Big timber project

in Vanimo area

Government agricultural officers have begun negotiations with native owners to acquire 600,000 acres of native-owned land in the Vanimo area for the largest timber project in New Guinea.

Vanimo is on the northern coast

of the New Guinea mainland, about 25 miles east of the New Guinea- West Irian border. Timber resources of the area are estimated at 4,500 million super feet.

The land is owned by about 4,500 natives, many of whom are semi nomadic hunters. More than $300,000 is expected to be paid for it.

Good access is available nearby at Vanimo Harbour, which is a sheltered, deep-water port.

Japan will be the main market for the Vanimo logs. New Guinea Gold fields began shipping timber from its 35,000-acre lease, west of the native-owned land near Vanimo, in September last year ( PIM, Oct., 1967, p. 105).

A company spokesman told PIM in January that one million super feet of timber had so far been shipped to Japan and an experimental small shipment of logs had been sent to Australia. Another million super feet of timber was awaiting shipment to Japan, he said.

Copra prices

may drop

A general decline in the price of copra could occur during the next few months, according to the chair man of the Papua-New Guinea Copra Marketing Board, Mr. lan McDonald.

In a report issued in Port Moresby on January 23, Mr. McDonald said: “Prices for most edible oils and fats generally are expected to stabilise and. in some cases, particularly sunflower and ground nuts, to show a

firming tendency over the next few months.

“The soya bean market, as usual, will exert a big influence on edible oil prices, not only in the US but in world markets, particularly as the danger of devaluation of the US dollar is now regarded as having been removed, at least for the time being.

“Prices of sunflower and fish oil are at present so low that a reaction on the side of producers must be expected sooner or later, and with increasing production of ground nuts being expected, laurics will probably come under heavy pressure. Thus it would not be surprising to find a general price decline in copra during the next few months.

“However, at present copra prices are steady with a firming tendency, and have averaged £Stg.lo7 over the last few weeks. It is likely that this price level will continue at least for the remainder of this month.”

Canton Island

gear for Samoa

American Samoa is to receive about $U5350,000 worth of equip ment such as tractors and road graders from the mid-Pacific Ameri can air base at Canton Island. This follows a recent decision by the US National Aeronautics and Space Administration to close down its base on Canton Island, a small atoll 750 miles north of American Samoa.

The US Federal Government decided to give the equipment to American Samoa and the US Navy has agreed to transport the equip

ment free of charge. A Navy tug boat and the inter-island vessel YF-340, with two barges, will make several trips from Pago Pago to Canton and all equipment is expected to have arrived in Pago Pago by February 17.

Canton Island, which was once well-known to trans-Pacific airline passengers, sprang into prominence in 1937 when it became a strategic stop over for air services from the United States to Australia.

Ownership of the island was ther claimed by both Britain and the United States, and when no agree ment on this could be reached, botl Canton and nearby Enderbury Islanc were placed under joint British anc American control for communicatior and aviation purposes.

From then until the late 1950’s trans-Pacific air passengers stoppec at Canton overnight. During Work War 11, the island was occupied h] thousands of US servicemen.

With the coming of big jet aircraf in the late 1950’s and 1960’5, th< need to stop at Canton Island t( refuel became superfluous, but th« aviation facilities were maintained fo emergencies until June, 1965, by th< US Federal Aviation Agency.

When FAA withdrew, its facilitie were taken over by a group of tech nicians who manned a small Gemin tracking station for the Nationa Aeronautics and Space Administra tion.

Pilots have now been asked t( delete all references to navigationa aids on Canton from their aero nautical charts.