New World Infrastructure Recommendation: Long-term Buy Brokerage: Merrill Lynch NEW World Infrastructure invests in, builds and operates infrastructure projects in Hong Kong and the mainland. Interim net profit for the six months ended December rose 25 per cent to $343 million helped by strong growth in power and water-treatment plants. Earnings are expected to grow even faster in the first half of this year, while high earnings per share growth of 20 per cent is forecast for the 1998 financial year. The stock is favoured over competitor Cheung Kong Infrastructure because of its greater mainland exposure, higher quality and more balanced infrastructure portfolio. First Pacific Co Recommendation: Buy Brokerage: Indosuez WI Carr FIRST Pacific is engaged in marketing and distribution, telecommunications, property and banking. The stock is more of an asset play than a growth story, and with a discount to net asset value of more than 30 per cent, the valuation remains attractive. The company's 1997 results were slightly below expectations. Net profit rose 4 per cent to US$212 million, but recurring earnings dipped 18 per cent to US$166 million. Key points from the results were the US$550 million needed to recapitalise its subsidiaries, net cash head office of US$1.14 billion and no debt on a consolidated basis. Wing Lung Bank Recommendation: Sell Brokerage: ING Baring Securities WING Lung Bank is chiefly engaged in banking and related services, and insurance underwriting. The group remains one of the most uninspiring of the Hong Kong banks, with an old-fashioned business combined with poor disclosure. Wing Lung's 1997 results were behind consensus, and showed falling capital adequacy ratios and a hefty rise in its loan to deposit ratio from 58 per cent to 67 per cent. The share price of this illiquid stock remains at an unjustified premium to the likes of Dah Sing Financial and Wing Hang Bank. National Mutual Asia Recommendation: Buy Brokerage: OCBC Securities NATIONAL Mutual is engaged in underwriting and all aspects of insurance. Its core insurance business will continue to grow on the back of renewal and new business, and the high persistency ratio of 84 per cent shows the company has great strength in retaining existing policies. Meanwhile, low penetration rates and a maturing population bode well for the growth of the life insurance industry in Hong Kong.