Magician Industries Recommendation: Buy Brokerage: Dharmala Securities MAGICIAN Industries designs, manufactures and sells a range of plastic and metal general house, kitchen, and bathroom items. The group's earnings have risen steadily over the past five years and are expected to grow at 18 per cent in the 1997 financial year and 26 per cent the following year. Part of the increase will come from the recent acquisition of a 51 per cent stake in a new bottling plant from Glory Success International, which supplies Coca-Cola's bottling plant in Hangzhou. Magician is also improving its competitive edge by continuing to design and develop 300 or more new products each year. Yizheng Chemical Fibre Recommendation: Buy Brokerage: SBC Warburg YIZHENG manufactures and distributes polyester chip and polyester stable fibres for sale throughout China. The group's interim results were at the bottom of market forecasts with the 75 per cent slide largely due to a fall in average product selling prices. Profit margins are likely to improve from the second half of this year due to lower raw material prices and increasing sales volumes. In light of Yizheng's solid management, strong balance sheet, and strengthening position in the regional polyester industry, this is a good opportunity to build up holdings in this counter. Union Bank of Hong Kong Recommendation: Sell Brokerage: MeesPierson Securities (Asia) UNION Bank provides a range of banking services in the territory. The company posted a 17 per cent increase in interim profit, but operating income was less impressive as the bank had to cut its fees due to increased competition. Union Bank has made a controversial expansion into infrastructure by investing US$5 million for a stake in a Guangdong province highway. Earnings are likely to be depressed this year due to the effective tax rate for the bank increasing to 16.5 per cent from 12.8 per cent, and there is likely to be a charge for bad and doubtful debts.