PUBLISHED : Sunday, 24 October, 2004, 12:00am
UPDATED : Sunday, 24 October, 2004, 12:00am

About a year ago Lehman Brothers said commercial satellite operator Asia Satellite Telecommunications Holdings (AsiaSat) was set to gain from the regional economic recovery. Lehman raised its stock rating to ''overweight'' and increased its price target to HK$16.50. The counter was trading at about $13.30 at the time.

The report said the satellite sector should improve as stronger consumer spending led to higher advertising revenue, lifting demand for broadcasting content and transponder capacity.

The company had lagged the market over the past six months and traded at attractive levels with a 2003 price earnings ratio of 11 times and strong cash flow. Lehman considered it an opportunity to buy a market-leading franchise.

Lehman said the stock also offered a potential call option on the China broadcasting sector. AsiaSat had worked closely with the government to gain access to the direct-to-home pay TV market.

In March AsiaSat posted a 32.92 per cent fall in second-half net income after demand shrank.

Profit fell to $184.4 million from $274.9 million in 2003. For the full year AsiaSat's net income fell 24 per cent to a four-year low of $424.5 million.

The counter closed at $15.40 on Thursday.