CITIC is a blue-chip conglomerate strongly favoured by brokers SBC Warburg. The group has interests in infrastructure, trading, distribution and consumer credit. Other areas of business include property and industrial manufacturing. Warburg said Citic was due for a re-rating to reflect its revitalised corporate direction and strategy. Added to this is the potential upside for earnings and net asset value (NAV) upon any further switch of investment from Hongkong Telecom into infrastructure. The fast-growing infrastructure and property divisions have improved its earnings quality. They have also underpinned its transformation into a truly diversified conglomerate. The $3 billion raised from the sale of a 2 per cent interest in Hongkong Telecom in June strengthened the group's balance sheet. It also enabled Citic to continue to rapidly expand its infrastructure division. Meanwhile, a full disposal of its Telecom interests would raise 1997 earnings by 30 per cent and NAV by 32 per cent. This in turn would free up more funds for Citic to invest in infrastructure projects. To be fair, when Crosby Securities recommended Kingboard Chemicals Holdings, the firm had just announced a 24 per cent rise in profits. 'The current share price represents excellent value,' the brokerage said at the time. Since then, Kingboard, which specialises in copper-clad and unclad laminates used for the manufacture of circuit boards, has been the source of a string of depressing news. Increased competition led to poorer-than-expected interim results. Sentiment was also battered by reports company directors were selling off their stock. One year after Crosby made its buy recommendation, Kingboard has fallen in value form about $2.65 to $1.04, trailing the Hang Seng Index by 64 per cent.