First Pacific a sound bet
THE First Pacific conglomerate looks likely to enjoy strong profit growth from its telecommunications business in the next two years.
The company has four telecom operations, Pacific Telelink and Pacific Link (Hong Kong mobile-cellular) in Hong Kong, Smart in the Philippines and Indolink in Indonesia.
Pacific Link is making profits now, while the other three remain in the start-up phase. Pacific Telelink and Pacific Link were recently merged into Asia Link. However, an increased contribution from Pacific Link and reduced losses at Pacific Telelink ensured combined growth of 21 per cent in 1994.
As handset supply problems ease, Pacific Link added 13,000 subscribers, or achieved 16 per cent growth since the start of 1995, compared with 12,000 in 1994.
Pacific Telelink will break even early this year. As telecom projects hit the black, profit growth should remain impressive, with the telecom business becoming the group's main earner by 1996.
Its property arm, First Pacific Davies, has again reported outstanding results, up 85 per cent in net profits last year.
About 30 per cent was supplemented by an estimated $210 million from Hong Kong property disposals.
Property under management exceeded 105 million square feet as of December 31, 1994, up some 50 per cent since the end of 1993, with progress made in China and the rest of the region, as well as Hong Kong.
The Philippines telecom operation now includes mobile cellular phones, paging and an international gateway facility. Starting in mid-1995 the scope will widen to include fixed-wire services.
From an effective start in August 1994, Smart's cellular operation ended the year with a credible 31,000 subscribers. Growth has been maintained with 16,000 subscribers added in the first two months of 1995.
Brokerage Smith New Court recommends buying the stock with a market rating achievable in the short term, giving a target price of $6.15. The stock still trades at a 14 per cent discount to market based on 1996 estimated earnings and at a 35 per cent discount to appraised net asset value of $8.21.
The brokerage also suggests the stock remains an excellent long-term investment with strong prospects on all fronts.
