Asia Satellite Recommendation: Buy Brokerage: Merrill Lynch ASIA Satellite Telecommunications provides satellite transponder capacity in Asia. It owns and operates satellites for commercial services primarily to the broadcasting and telecommunications industries. It plans to launch a satellite in March to replace its existing Asiasat 1. 'A failure may mean loss of customers,' says Merrill Lynch. The brokerage sees benefits from the recent stake purchase by Societe Europenes des Satellites (SES). SES should provide technical expertise as well as widen the coverage area. Johnson Electric Recommendation: Sell Brokerage: ING Barings JOHNSON Electric is the world's second-largest micro-motor manufacturer, which ING Barings says is in the latter stage of metamorphosis from a sleepy industrial into a modern, value-driven enterprise. As a result, returns have increased substantially over the past few years and a rapid decline in raw-material costs also has boosted margins. Its war chest of $2 billion is earmarked for the acquisition of a downstream business in the United States. Given the over-stretched valuations in the US, any acquisition is likely to be over-priced, says ING. On an enterprise value (EVA) basis, the shares are trading at a premium to ING's estimated EVA of $17.16. Cathay Pacific Airways Recommendation: Outperform Brokerage: Lehman Brothers CATHAY Pacific is Hong Kong's flagship air carrier. Lehman Brothers recently upgraded its recommendation on the company to outperform based on cost and traffic improvements. Traffic should be helped by the relatively better outlook for global economic growth. This will help offset an expectation of weaker yields, says Lehman. The brokerage cut its unit cost forecasts by about 3 per cent annually, principally based on removing six Boeing 747s from the fleet, resulting in improvement in overall loads. The brokerage recently raised its price target to $9.50.