CITIC Pacific is a conglomerate with interests in Hong Kong and in the mainland in aviation, utilities, manufacturing, toll roads and property. It holds stakes in Hong Kong Telecom, Cathay Pacific and CLP Holdings.
ABN Amro has put a buy on the stock, saying its risk profile has fallen significantly as interest rates eased.
'If interest rates fall sharply - as we project - the risk associated with a highly geared company should fall,' the brokerage said.
Based on Thursday's closing price of $18.65, Citic is trading at a 32.5 per cent discount to its net asset value. ABN predicts that discount will narrow to 20 per cent, setting a target price of $22.
ABN estimates Citic's net debt at $21.6 billion by the end of the year and that a 1 per cent reduction in the effective interest rate will boost profit by $216 million.
That the chairman of parent Citic Beijing had helped Citic Pacific meet its financial obligations this year showed ties with Beijing remained strong, ABN said.
