Hold PetroChina Merrill Lynch has cut its Petrochina earnings forecast for last year and this year by 6 per cent after the release of production data for last year. Merrill Lynch forecasts 24.2 HK cents earnings per share for last year and 22.6 cents for this year, both down from 25.1 cents in 2001. Although the company's oil and gas production volume was in line with projections, Merrill Lynch has cut earnings estimates because of lower than expected realised crude prices for last year. Realised crude price fell 4.9 per cent on year to US$22.5 per barrel last year. Merrill Lynch analyst Wang Guohua prefers Sinopec to PetroChina because of Sinopec's lower risk profile and greater earnings momentum, but CNOOC is his favourite oil and gas play among the oil giants. Buy Sun Hung Kai Properties South China Brokerage recommends buying the property developer because it is trading at a 22 per cent discount to present net asset value. Despite sluggish growth prospects, valuation is inexpensive, with shares likely to trade in a range of HK$42.90 to $58.20. The brokerage set the price target at $55, which offers about 15 per cent upside from the present level. The brokerage estimates that 74 per cent of this year's property development profits have been locked in, providing a floor for this year's earnings while three projects planned for sale this year should support next year's results. Nonetheless, South China Brokerage is expecting little to inspire from Sun Hung Kai's performance over the next two years - with earnings expected to dip 8 per cent next year. Buy Esprit Holdings DBS Vickers Securities lifted this year's and next year's earnings forecasts by 6 per cent to 8 per cent for the clothing retailer to factor in the stronger euro and good momentum in Europe. While sales in Asia were flat, sales in Europe jumped 30 per cent in the year to November, said analyst Alice Hui. Esprit's bottom line will benefit when the strong euro is converted into Hong Kong dollars, the currency it reports in. While Esprit is on a multiple of 17 times forward earnings, that is still lower than its three-year compound annual earnings growth rate of 21 per cent. Its peers were trading on multiples equal to their growth rates making Esprit better value, Ms Hui said.