HKR International Recommendation: Buy Brokerage: Merrill Lynch Asia Pacific HKR International is mainly engaged in the development, management and provision of services for housing and leisure projects in Discovery Bay, Lantau island.
The company is expected to be able to capitalise on the property market downturn by lowering the land premium for the 2.26 million square foot extension of the Discovery Bay township.
HKR should also be the greatest beneficiary from three major infrastructure projects: the tunnel link to Discovery Bay due to be completed in 1999, the road linking Lantau to Yuen Long by 2007, and the North Lantau reclamation.
Cathay Pacific Airways Recommendation: Sell Brokerage: BNP PrimeEast Securities CATHAY Pacific operates a commercial airline under its own name and holds stakes in Dragonair, Haeco and Air Hong Kong.
Companies that rely on tourism will face a difficult 1998 as the currency turmoil around Asia and the financial crisis in Japan will see visitor arrivals fall an estimated 5 per cent.
Cathay faces a major slowdown in earnings because of the massive fall in the number of Japanese visitors.
The outlook is further dimmed because depreciation charges will increase by an estimated 14 per cent this year due to Cathay's purchase of 10 new aircraft and the construction of its new Chek Lap Kok airport headquarters.
