ABC Communications Recommendation: Buy Brokerage: Salomon Brothers ABC recently announced its results for the six months to September 30, 1994. Despite 19 per cent year-on-year growth in turnover, operating margins fell because of strong price incentives in the Hong Kong paging market and losses sustained by ABC's Vietnam operations.
However, earnings rose 24 per cent and a 528 per cent rise in the profit line of ABC's associated companies more than made up for lower operating margins.
Vietnam operations are now moving closer to breaking even, which should have a positive effect on the company's operating margins.
Beiren Printing Recommendation: Hold Brokerage: Salomon Brothers BEIREN Printing reported strong interim results in August, with distributable net profits up 33 per cent to 55.5 million yuan ($50.8 million), but management warned of problems in the second half of 1994.
Since the Chinese authorities have identified inflation and fixed-asset investment as their key concerns, the brokerage expects the austerity programme to go on well into this year.
The brokerage remains bearish on the China machinery sector, given the lack of liquidity. Beiren's share price has fallen 45 per cent in the last three months.
Hsin Chong Construction Recommendation: Buy Brokerage: Sassoon Securities DURING 1993, public spending on building and construction surged about 61 per cent to $32.6 billion, with private spending down only five per cent to $40.6 billion. This trend is expected to continue as airport projects come on stream and government-subsidised housing worth $42.5 billion is due to be built in the next few years.
