Sun Hung Kai Properties

Cost flexibility and traffic growth will lift Telecom

PUBLISHED : Sunday, 13 October, 1996, 12:00am
UPDATED : Sunday, 13 October, 1996, 12:00am

Hongkong Telecom Recommendation: Buy Brokerage: Salomon Brothers HONGKONG Telecom is the territory's largest telecommunications provider and also operates computer engineering and other services.

Good cost flexibility and international traffic growth of 11 per cent should allow Telecom to exceed expected 12 per cent earnings per share growth.

The shares are selling at a low in valuation terms, meaning negative expectations are incorporated in the price.

Better business news from China, higher than expected earnings growth and better clarity about compensation for the early loss of its international monopoly should help to boost shares.

Tak Sing Alliance Holdings Recommendation: Buy Brokerage: Cheerful Research TAK Sing Alliance makes clothing, including jeans, skirts, jackets and shirts.

The group's Carrianna Friendship square in Shenzhen is closer to completion and should deliver handsome profits in 1997 and 1998. Part of the development will be leased out, providing strong recurrent income.

The group plans to list its highly profitable US garment operation, which should improve the market position of its brand names Squeeze and Chiori.

Sun Hung Kai Properties Recommendation: Buy Brokerage: HG Asia SUN Hung Kai Properties is one of the territory's largest property developers. Other interests include finance, insurance and parking management.

The shares punctured the long-standing $79.50 resistance level last week. While some analysts say heavy resistance should continue, they are likely to reach $100 by the end of 1997.

The company has procured five million square feet of attributable residential ground floor area and this will boost its net asset value.

To control inventory and cash-flow risks, Sun Hung Kai Properties is likely to step up property sales over the next 18 months, which will strengthen earnings.