WHEELOCK & Company has interests in property, hotels and infrastructure investments held through Wharf and New Asia Realty & Trust. Brokerage SBC Warburg has recommended the stock as a 'buy', saying it is good value after two years of underperformance. Wheelock is a good vehicle to capture the turnaround in the property portfolios of Wharf and New Asia Realty. It is trading at a discount to estimated net asset value of 35.7 per cent, bigger than Wharf, at 26 per cent, or New Asia Realty, at 34 per cent. A sharp recovery in its retail operations and the additional earnings from the Diamond Hill project should see compound growth of 28 per cent in pre-exceptional profit between 1996 and 1998. The group's net book value should increase 16 per cent and 11 per cent over the next two years owing to higher retained earnings and a steady rise in Wharf's and New Asia Realty's net asset values. Development of new businesses was a major theme in 1993 and led to several joint ventures which are likely to benefit from the long-term economic growth in China. Historically, Wheelock's share price has tended to trade in a price-earnings (P/E) range of 10 to 16 times and it is now at the lower end, trading at just 12.5 times. Given better earnings prospects, it should be re-rated to a P/E of 14, which indicates a share price of $18.60, a rise of 24 per cent.
