Upgrades and downgrades
Television Broadcasts UBS Warburg has maintained its 'buy' rating on Television Broadcasts (TVB). The brokerage expects TVB to report a 35 per cent drop in net profit tomorrow to HK$460 million. UBS said TVB's present franchises in Hong Kong enjoyed significant operating leverage, which made the stock an attractive play on an eventual cyclical recovery. The brokerage has a price target of $29 on the stock.
Shun Tak Holdings Salomon Smith Barney has reiterated its 'outperform' recommendation but cut its earnings estimates for Shun Tak. The brokerage expects the leisure and gaming play will report a full-year net profit of HK$346 million tomorrow against its previous estimate of $538 million. The revision was prompted by falling property prices and higher oil costs for its jetfoil operations. Salomon, however, has raised its target price from $2 to $2.40, based on an adjusted price to expected book value ratio of 0.72 times.
Shangri-la Asia Merrill Lynch has maintained its 'neutral' stance on Shangri-la after it posted a 58 per cent jump in net profit to US$93 million last Friday. Shangri-la has committed $440 million for new hotel projects in the next three years. Merrill is concerned it has committed to too many expansion projects. It also said Shangri-la's shares, at 14 times its expected earnings, did not seem appealing.