Hong Kong & China Gas Recommendation: Buy Brokerage: Nava SC Securities HONG KONG & China Gas is the oldest utility in Hong Kong and the sole supplier of Towngas throughout the territory. The group stands to benefit from the construction of the Mass Transit Railway's East Kowloon line as the proposed To Kwa Wan station will be underneath the group's South gas plant. Hong Kong & China Gas should be able to redevelop the site into 1.4 million square feet of commercial space for rental. With steady growth from the gas business and future earnings from property developments, a buy recommendation is maintained. Johnson Electric Recommendation: Buy Brokerage: ING Barings JOHNSON Electric manufactures micromotors for use in tools, toys and automobile accessories. The group's share price has plunged around 20 per cent since the end of February without any fundamental reason. Following a difficult financial year in 1996, 1997 promises to be excellent and 48 per cent earnings growth is expected. Steel prices and copper prices have come off 1995 highs and are expected to remain flat this year, which should help profit margins improve at least 2 per cent in the next two years. Ngai Lik Industrial Recommendation: Long-term Buy Brokerage: Dharmala Securities NGAI Lik Industrial designs, manufactures and sells electronic products, including hi-fi systems, compact disc players and clock radios. The group's main business faces severe competition but is able to maintain profitability due to a vertically integrated manufacturing process and strong client base. Ngai Lik started production of Sony's Walkman and Discman machines last April, and has had a good response in the US market. An extension of the product range to home-theatre centres and power amplifiers could generate sales of $20 to $30 million in 1998. Companion Marble Recommendation: Long-term Buy Brokerage: China Everbright COMPANION Marble installs marble and granite and importing marble and granite products. The group has a proven track record and has been awarded large-scale projects such as new MTR stations in Tai Kok Tsui and Tsing Yi. Contracts on hand and outstanding contracts amount to $500 million and $125 million and there is plenty of room for expansion. Higher profit margin and rapid growth in China should see earnings rise 81 per cent in 1998, bringing the price earnings ratio to 6.9 times.