Sino has room for growth
Sino Hotels Recommendation: Buy Brokerage: DBS Securities THE group owns the 615-room City Garden Hotel in North Point. Opened in 1988, it caters mostly to Taiwanese and Southeast Asian group tourists, who currently make up over 56 per cent of the guest mix. But the hotel plans to shift its focus to frequent independent travellers, who typically pay 50 to 60 per cent more than group rates.
The company's Royal Pacific hotel enjoys an excellent location above the China Ferry Terminal, ensuring high occupancy rates, while dividends from its 4.3 per cent of Hongkong & Shanghai Hotels provide good cash flow. HSBC Holdings Recommendation: Buy Brokerage: Vickers Ballas INFRASTRUCTURE loans and trade financing will help offset a slowdown in mortgage lending growth in Hong Kong. A more stable investment environment points to higher dealing profits at British subsidiary Midland Bank, even though the corporate loan market in Britain remains competitive.
Average double-digit growth is expected over the next three years, particularly as US interest rates are believed to have peaked. Conditions remain healthy in the group's major markets. M C Packaging Recommendation: Sell Brokerage: Salomon Brothers M C Packaging's 28 per cent rise in 1994 profits to $143.7 million was seven per cent above expectations. However, sales growth of 27 per cent was slower than expected, reflecting the growing maturity of Hong Kong operations.
Despite the better results, the brokerage remains concerned about the company's risk profile. Any delays to the start-up of factories in China could lead to a substantial earnings disappointment. Beiren Printing Recommendation: Hold Brokerage: Salomon Brothers CHINA'S largest offset press manufacturer recorded a 24.6 per cent drop in operating profit margins last year. Its effective tax rate also increased to 17.6 per cent from 15.9 per cent in 1993.
Beiren's 1995 earnings will remain clouded by uncertainty due to the mainland austerity programme. The brokerage also remains cautious about the company's investment strategy. The 65 million yuan invested in a Beijing property project shows a lack of investment opportunities in its core operation. Luoyang Glass Recommendation: Buy Brokerage: New China Hong Kong Securities LUOYANG, the largest float sheet glass manufacturer in China, produced 371,250 tonnes of float sheet glass in 1994, up 20 per cent from 1993.
Although the company's market share will shrink as the market expands, the brokerage still believes the company commands a competitive advantage thanks to its five production lines. Sun Hung Kai Properties Recommendation: Buy Brokerage: Merrill Lynch SUN Hung Kai Properties posted net profits of $4.90 billion for the six months to December 1994, a rise of 16 per cent over the corresponding period a year earlier.
During the first half of 1995, about 2.5 million square feet of properties were completed for sale, while 0.2 million sq ft were added to the rental portfolio. The brokerage estimates about one-third of development profits for 1996 have now been locked in. Earnings prospects therefore appear more secure than for other developers.