Cosco Pacific Recommendation: Buy Brokerage: Nikko Research Center COSCO Pacific is involved in container-leasing and container-management services.
The company has signed letters of intent with mainland port authorities to invest $2 billion in three ports, which will help it reduce its reliance on container leasing.
The acquisitions should bring increased benefits from the mainland's expected strong trade growth.
The stock is trading at about 11 times estimated 1998 earnings, making it cheap compared with other red chips.
China Telecom (HK) Recommendation: Buy Brokerage: Goldman Sachs CHINA Telecom is a unit of the mainland's Ministry of Posts and Telecommunications (MPT) and provides mobile phone services in Guangdong and Zhejiang provinces, where its market share was 98 per cent at the end of last year.
Its two markets should see subscriber growth average 36 per cent a year over the next five years. It has an opportunity to grow by buying other assets owned by the MPT, which controls about 70 per cent of the mainland's cellular market.