TAI CHEUNG Recommendation: Buy Brokerage: G K Goh Tai Cheung's final results for the year ended March 31, rose 45 per cent to $464.5 million. Most profits came from property development: the group successfully sold the remaining flats in Wilshire Tower, a residential building, and completed and fully sold the Eastern Harbour Centre, a godown in Quarry Bay. During the year, the group acquired a site in Shau Kei Wan for $475 million which could be developed into 272,060 square feet of office space. Completion is expected in FY96. Tai Cheung has a 10 per cent stake in Lee Gardens International Holdings, which sold its 50 per cent holding in Lee Gardens Hotel to Hysan earlier this year. The proceeds, estimated to be $1.225 billion to $1.427 billion, will be distributed to its shareholders as a dividend and will be booked above the line. Tai Cheung invested $3 million for its 10 per cent holding. Earnings are expected to more than double in FY94 to $1.066 billion. The bulk of earnings will be derived from the sale of Peninsula Square, which is more than 80 per cent sold, and the dividend from the sale of the Lee Gardens. Earnings in FY95 will mainly be derived from three office properties in Sha Tin, Aberdeen and Tsim Sha Tsui East. In view of the recent strong demand for office properties, and the trend to move back offices to decentralised areas, Tai Cheung is likely to reap significant profits. CHINA LIGHT & POWER Recommendation: Buy Brokerage: Salomon Brothers China Light & Power's (CLP) fundamental qualities and the future potential for its investments in China have not been fully appreciated by investors. CLP's shares offer investors a conservative high-quality play on the Hong Kong economy and relatively low-risk exposure to the high-growth mainland sector through future projects such as the proposed 3,600 MW Shandong Electric Power Station. This project is expected to be the first of many in the mainland in the next few years. Based on a discounted dividend model for CLP's existing businesses, the shares are worth $42.90 compared with the current price of around $38. However, this value only accounts for earnings from existing operations.Including the Shandong project, Salomon Brothers believe the stock is worth $47.26 - 18 per cent higher than the present share price.
