UNDERPERFORM MTR Corp BOC International said MTRC's prospects remained weak because of competition from other methods of transportation and a weak economy. Upside on its railway operation is limited and slow sales will continue to hurt its property business. The company also remains shadowed by prospects of a potential merger with rival Kowloon-Canton Railway Corp. The company said railway patronage climbed 2.4 per cent last year, mainly due to the opening of the Tseung Kwan O line. Stripping out the additional line, there might have been a mild drop, BOCI said. Patronage on the Airport Express fell 6.8 per cent. BUY China Pharmaceutical Kim Eng Securities upgraded its price target and earnings forecasts for the company. Analyst Dennis Lam raised the target to HK$2.01 from $1.58 on the continued rebound of vitamin C prices and stable penicillin prices. The company also has plans to launch a new drug, butylphthalide, in the second quarter. The brokerage increased its net profit forecast for last year by 3 per cent to $239.8 million, which would represent a 71.28 per cent gain on $140 million in 2001. It raised its forecast by 12 per cent to $351.3 million for this year. Prices for vitamin C this month are nearly double the 2001 level amid a declining world supply, promising strong margins this year. HOLD Henderson Investment Merrill Lynch said the recent rebound in Henderson shares suggested the market was speculating that a new proposal might emerge after shareholders rejected Henderson Land's privatisation offer earlier this month. But Merrill is sceptical that a new plan is underway and says none of the alternatives are perfect. Henderson Investment's shares sank more than 20 per cent after the privatisation scheme failed but they have rebounded and are hovering about 10 per cent higher than Merrill's fair value estimate of $6 a share. Does Henderson Land have a back-up plan or is it going to wait 12 months, Merrill analyst Clifford Lam asks. Even if any of these back-up plans came through, Mr Lam said upside to the share was limited to 12 to 15 per cent from present levels.