The sound of silence is sweet music at EMI

Buy in to buyout winners ICP; Chorion looks high enough

Silence, so the lyric goes, is golden. Shareholders awaiting the latest release from Messrs Eric Nicoli and Alain Levy, the duo in charge at EMI, have been happily disappointed to find that no trading update accompanied the music group's financial year-end on 31 March. The lack of news means EMI must have met market forecasts for the year.

This seems to have stopped the downward momentum and gives investors a breathing space to consider the attractions or otherwise of its bombed-out shares.

The Dutch brokerage ABN Amro was the latest to deliver its verdict yesterday, formally abandoning its positive stance. EMI shares dived 5 per cent to 96.75p. But of all the analysts who have called in for a pre-results chat over the fortnight, more have come away reassured than negative.

There is a pretty good case for those with a high appetite for risk and a short-term outlook to buy in. Grammy-winning Norah Jones continues to sell and has a second album on the way. That should take the edge off the continuing decline in global music sales, a decline which surely can't be as bad as the 15 per cent predicted by Sony for this year. Meanwhile, EMI's recorded music division, headed by M. Levy, is making the promised progress on cutting costs and helping to improve the group's poor record in cash generation. Most analysts now believe the 8p full-year dividend is safe for now (although ABN Amro, whose forecasts are used in our table, is not sure), giving the shares an attractive 9 per cent yield.

On balance, it would seem that the news flow is going to be better rather than worse this year, and the stock will be supported by its meagre valuation, which puts it on about six times earnings that are already in the bag.

It is impossible to recommend the shares to long-term buyers. The music industry has no clear response yet to the threat from internet downloads; EMI's own publishing division, currently a cash cow of golden oldies, might start to feel the knock on effects; and a £1bn debt burden keeps the pressure on that dividend. But the stock is a short-term buy.

Buy in to buyout winners ICP

In a climate of fear – when banks don't want to lend too much and private equity houses fret about how they can sell on any investments they make – Intermediate Capital can fill financial holes in a management buyout. ICP is a specialist in "mezzanine finance", which offers high-interest loans to MBO vehicles and also takes an option over a chunk of equity, too. It has been in demand over the past year, even though buyout activity has been subdued.

ICP arranged £523m of mezzanine financing in the year to 31 January, so its profits from interest income and fees rose 18 per cent to £45.9m. Add in capital gains from the sale of its equity investments and pre-tax profits were up 28 per cent to £53.5m. The group is paying a dividend of 31p for the year and, on analysts' forecasts, should yield 4 per cent in the coming year at yesterday's share price of 832.5p.

That was down 21.5p on the day as investors took profits from the recent strong run, having noted some words of caution in the results. While the new financial year started well, with three deals totalling £50m tied up within weeks, there has been a bit of a wobble since. Unsurprisingly, with eyes focused on events in Iraq, a number of big deals remained unsigned.

All that said, the company is confident that there are a number of big opportunities still floating around. With a new £500m fund being raised, and with the group able to hike its own borrowings to invest, too, ICP is – as ever – in pole position to win the business. The shares continue to be good value.

Chorion looks high enough

The famous Five are not quite as celebrated as they once were, but Chorion hopes to change all that. Similarly, it doesn't want the Secret Seven to stay a secret much longer. The media rights group is hoping to realise the unexploited potential for spin-offs from these books.

It considered selling its rights to the treasure chest of characters and stories, but couldn't attract bids near the £30m it wanted. So it is back in the toy box for Noddy and the folk of the Faraway Tree, and shareholders are certainly much better served this way than through a cut-price sale. Although it took a long time to get commissioned, the Make Way for Noddy television programme on Five is now a huge success, winning a 20 per cent audience share among four- to nine-year olds.

Chorion's crime brands division, the home of Agatha Christie's back catalogue, is going great guns. Turnover there rose 12 per cent to £5.6m last year. There's no mystery here: since a rebranding in 1999, Christie book sales are up 25 per cent to 4 million a year.

Chorion's profits slumped in 2002 because of a string of one-off items, including the costs of demerging the old nightclubs business. But there was disappointment that sales fell, as Chorion found broadcasters cutting back on programme commissions. Down 0.25p to 3.75p, the shares trade on 13 times likely 2003 earnings, and they look high enough for now.