Country: Malaysia Company: Tenaga Nasional Recommendation: Sell Brokerage: Merrill Lynch MALAYSIA'S new cabinet shocked the markets earlier this month by revoking an average 3.9 per cent tariff rise imposed by electricity supplier Tenaga in April. Under the direct pass-through formula, Tenaga is allowed to raise tariffs to offset higher costs of fuel and power purchases from independent power producers.
The Government's failure to adhere to its agreement has dampened investor confidence. Merrill Lynch has reduced its net profits estimate for 1995 by 12 per cent to M$87.6 million (HK$273.31 million) with 1996 profit expectations also reduced.
Country: South Korea Company: Chosun Brewery Recommendation: Buy Brokerage: Schroders AFTER a strong 1994, Chosun's market share continues to increase, from 33.8 per cent last year to more than 37 per cent in the first quarter of this year. The company's HITE beer is now an established brand name and should enable it to achieve earnings growth well above the industry average over the next several years.
Recurring profits are expected to surge 151 per cent this year, while costs are forecast to fall. Despite a substantial dilution of shares, projected earnings-per-share growth is expected to be about 90 per cent this year.
Country: Sri Lanka Company: DFCC Recommendation: Buy Brokerage: Smith New Court DEVELOPMENT Finance Corp of Ceylon (DFCC) retains its status as a premier lending institution in Sri Lanka, given sustainable 20 per cent annual growth in earnings per share. Dominance in project financing and leasing and low-cost funding allow the group to maintain spreads of more than six per cent.
Net-interest income is expected to grow 22 per cent annually until the 1997 financial year, supported by 25 per cent compound annual loan growth. Low bad debt exposure, adequate provisioning and high capital adequacy have resulted in a strong balance sheet and borrowing capacity.