Ming Pao Recommendation: Sell Brokerage: Smith New Court FINAL results were appalling. Even worse, they were qualified by the auditors, with concern over recoverability of loans totalling $296 million. Operating margins remain pressured as costs rise and revenue is expected to slow significantly this year. Apple Daily also threatens to take market share. Further problems include an 84 per cent rise in the cost of newsprint, while advertisers are not spending as aggressively as before. The stock trades at a discount for good reason. There are plenty of reasons to sell. Cafe de Coral Recommendation: Buy Brokerage: PrimEast STATISTICS indicate there is an upward trend in receipts from fast food and non-Chinese restaurants and this will benefit Cafe de Coral. Its operating margin was at a record low in the second half of the 1995 financial year but is expected to improve. Its major competitor Fairwood is floundering and could be driven out of business if Cafe de Coral's operating margins improve substantially. Its improved financial strength and market position ensure a brighter long-term outlook. MC Packaging Recommendation: Buy Brokerage: Baring Securities AS the largest manufacturer of two-piece cans in Hong Kong and China, MC Packaging will be a direct beneficiary of consumer growth throughout China. The group has eight factory locations and its customers include Coca Cola, Pepsi, Carlsberg and Shell Oil. Coca Cola and Pepsi are accelerating their drive to capture greater market share in China and MC has build up a stockpile of aluminium to buffer against a volatility in prices. Earnings growth of 25 to 35 per cent is anticipated for the next two years.
