SCTN - great value to be had

For me, SCTN is significantly undervalued at £5.20. I bought in at £4.79, again at £5 and also at £5.37.

Not only does is pay out a 5.5% dividend at the current share price of £5.20, it is retaining and re-investing a further £120million of post-tax profits per annum. Some of this investment is yielding 13% returns, for example Premier Lodge.

And there is decent growth out there - 7% across several divisions, I recall. This is way ahead of GDP growth of 2%.

There is also a big cost saving of £50million per annum to come through from the Scottish Courage reorganisation, which will have a significant impact on profitability.

SCTN only needs a P/E of 13 (at current profitability, ignoring the above positive factors) to reach a price of £6.50. Compare this with the likes of unexciting retailers such as Dixons and M&S with their P/E's in excess of 30 and I'll be amazed if we don't see a P/E of 15 by the end of 2002 and a price approaching £7.50.

One to hang on to, IMHO.