CONSIDERING the fall-off in its core business area of corporate finance, Peregrine Investments Holdings' results at the start of the week were far from bad. Profit was down 24 per cent to $650.73 million while turnover climbed 150 per cent to $28.9 billion. But in the savage final quarter of the year, Peregrine obviously saw regional corporate finance business fall off to practically zero - full-year profits from that division were down 68 per cent with a series of important issues postponed indefinitely. The chances are that Peregrine made almost all of its money in the first half. The first quarter of 1994 is probably responsible for significantly more than a quarter of total profits. Slightly surprising was how well the derivatives business performed - profits up 95 per cent and Philip Tose, Peregrine's chairman, said no risks were being taken. Unless OTC derivatives were being netted out and Peregrine has one set of customers who frequently make reverse bets to another set, then the cash is coming from issues of warrants. But after more than a full year of a bear market, many investors must surely be reconsidering the leverage and volatility that warrants offer. But issues of warrants have continued regardless - this week Nomura made a private placement of 100 million warrant on Wharf. Believe it or not, there are bulls about still, not only bulls, but bulls on Wharf. Even bulls on Wharf with large sums of money. Peregrine is likely to suffer more in 1995, however. This year does not look to be working out any easier for Hong Kong investment banks than 1994. Maybe Peregrine's Burmese shrimp farm will keep the profits ticking over. This week proved that it isn't the sexy businesses that always generate the cash. As the reporting season for H shares starts, the solid performers are emerging. Polyester-maker Yizheng Chemical Fibre turned in a 64 per cent increase in net profit, but only because it was on the lucky end of the tax and forex equation. It was handed back hundreds of millions of yuan paid in VAT, a situation it would be unwise to bank on in the future. Profits at Luoyang Glass, which had a difficult listing, fell four per cent, mainly as a result of a change in tax treatment that shifted the burden from eight per cent to 33 per cent. Worse hit was Shanghai Steel Tube, a B share that reported net profits off by 72 per cent as a result of falling sales and inter-company debt. The firm said it was owed 50 million yuan by Harbin Power Equipment. The thought of triangular debt in China in the abstract is frightening enough. Once the names of companies that people are actually invested in start to appear, the terror sets in. Neither of the above companies should fit comfortably in the 'doomed state enterprise' category. Shanghai Petrochem, which also had a very difficult listing, is likely to be a strong performer when it reports this week but other firms are reporting bigger inventories and lower margins. Beirin Printing warned investors in December that its results were going to be well down, hit by paper shortages and rising costs. Other firms are also likely to have been hit by inflation and by continuing debt problems. The trouble with the impact of rising tax is the difficulty of predicting where it will hit in China. One firm may win concessions of the kind Yizheng did - its neighbours might pay the price. The analysts get confused because management is often confused itself. There also seems to be confusion at Champion Technology. On Thursday, more than nine per cent of the shares in issue changed hands as the value of the counter fell 16.67 per cent. The price has more than halved in the past month. Part of the problem with the share price is that Champion was a ludicrously hyped stock. It out-performed the market as only a few ever do and a crash back was inevitable. Managing director James Carter did not even stay on the phone with Hindsight long enough to find out what we wanted to know about the company. He seemed terribly grumpy about something. In the old days, he would have been only too glad to chat. 'Champion is regularly featured in international business publications,' said the firm's 1994 report. But Mr Carter wanted to add nothing to the firm's statement made to the stock exchange. His boss, Paul Kan, said in March that Multitone, the firm's December 1993 British acquisition, was a low margin business which was operating in mature markets. Champion insisted the 'seasoned professionals' at Multitone would revitalise the paging game. The firm also seems to have run into trouble over its plans to bring paging to India. And no one seems to mention the firm's Russian ventures much any more. Or the future of its plans to offer data services by satellite to China. Or its TDMA digital mobile network in Sichuan. When companies that list phone numbers for their investor relations department suddenly stop talking to the financial community, what are we supposed to think? Apart from anything else, it is plain stupid. What could Champion possibly tell the market that would make the shares perform any worse than are doing now? Rhetorical question - do not write in. Let's hope things aren't going too badly. The company has shareholders' funds of $830.5 million while 1994 financial year saw a cash outflow before financing of $368.02 million. The outflow the year before was $115.64 million while shareholders' funds were $734.02 million. Some $261 million of the outflow in 1994 was spent on subsidiaries such as Multitone; $226 million went on telecom investments. Mr Carter and his colleagues won't get the chance to make many mistakes involving cash on that scale. But obviously, if they had made a mistake, they would tell us, or at least page us with the news.