CROSBY Securities is the latest Hongkong securities house to paint a pessimistic picture for Cathay Pacific stocks this year and urge its clients to sell. It has revised its forecasts after reading Cathay's latest monthly news bulletin. ''The newsletter carries two articles which give a good indication of the siege mentality that Cathay management is under,'' said a Crosby Spotlight report to its investors. Crosby said that given the poor quality of earnings and bad outlook, Cathay's share price had little going for it. Cathay was yesterday trading at a price/earnings ratio of 8.2 for 1993 and 7.4 for 1994. These figures represented discounts to the market of 10 per cent for 1993 and 3.4 per cent for 1994. Cathay's in-house bulletin said that ''by 1997, Cathay will lose 14 per cent productivity compared with its competitors''. This means Cathay needs to do 14 per cent better than them to maintain its position - a sizeable challenge. Crosby commented: ''In essence, this means Cathay Pacific needs to run to stand still.'' In response, Cathay's Hongkong public relations manager Mr Kwan Chuk-fai said: ''We are looking at the problem today and see this as a challenge. We are confident we can make it.'' Mr Kwan said a major internal review of the company's workings was under way to cut costs and to enhance quality. Cathay has set up 15 management projects to look at a range of issues, including streamlining, staff costs, productivity, revenue and organisational structure. Mr Victor Hughes, Cathay finance director, said in the in-house newsletter: ''Our staff costs are not as well controlled as we would like.'' The airline is planning to impose lower-than-usual pay rises, which staff are hotly contesting. A second article, on Cathay's management conference held in mid-December, indicated how the airline had fared in 1992 and revealed some budget targets for 1993. Mr Rod Eddington, managing director, said Cathay's targets and budgets envisaged ''more of 1992'', with yields and load factors little changed. He added that high inflation and the recession in key markets meant Cathay was ''caught between a rock and a hard place''. Mr Ronald Cobbold, marketing director, maintained that Cathay would end 1992 only about two per cent down on its passenger revenue target, despite worldwide recession. This he described as ''commendable''. Cathay's economy class load factor for 1992 was more than 81 per cent (86 per cent on long-haul routes) and first class yield and load factors were said to have held up well. However, there were drops in both load factor and yield in business class, reflecting economic problems, the competitive environment and frequent flier plans. Cathay's capacity will increase by 10.7 per cent in 1993 and the airline has indicated it is aiming for passenger revenue growth of 11.7 per cent. Crosby expected passenger fares to fall a further two per cent this year. Currency swings in the second half of last year were highly favourable for Cathay. Crosby estimated that although passenger and cargo fares had fallen three per cent and five per cent respectively, a net currency boost to yields of 1.9 per cent would hold yield declines to 1.2 per cent and 4.9 per cent respectively.