SmarTone Telecommunications Holdings Merrill Lynch raised this year's earnings estimate for SmarTone by 20 per cent to HK$323 million, or 55 Hong Kong cents, due to higher estimates for average revenue per user and the sustainable margins the mobile carrier has been enjoying since the second half of last year. The investment bank set a target of HK$10.50 based on a price earnings ratio of 17 times next year's earnings and a dividend yield of 2 per cent. The biggest risk to the price target was a resumption of price wars in Hong Kong's overcrowded mobile market, Merrill said. City Telecom Core-Pacific Yamaichi upgraded City Telecom to a buy recommendation despite the telecom play saying it was experiencing slowing uptake for its broadband services. The slowdown in broadband growth is being offset by solid growth in voice customers of 8,000 to 10,000 per month. City Telecom faced margin erosion in its international calls business, heavy capital expenditures and intense competition in broadband, analyst Mona Chung said. However those risks were all in the price with City Telecom trading at just 6.4 times this year's expected earnings per share of 22 Hong Kong cents. Ms Chung set a price target of HK$1.75 based on eight times this year's projected earnings. Clear Media GK Goh downgraded its Clear Media earnings forecasts by 17 per cent for last year and 20 per cent for this year. The trimming back of profit expectations came in light of the outdoor advertising firm's moves to clear up problems with account receivables which had taken the focus off growth, said analyst Charles Law. While receivables had been brought back to 2001 levels they were still too high at an average of 110 days to collect payment, he said. Further tightening in its credit policy was likely which would be a drag on sales growth. Trading at nearly 23 times this year's expected earnings, Clear Media 'remains rich in relation to its underlying organic growth and peers', Mr Law said. Cosco Pacific UBS Warburg initiated coverage of red chip Cosco Pacific with a 'reduce one' rating and a HK$6 price target, saying a recent rally in the stock had been overdone. Investors bought into Cosco on the story that it was riding the rising tide of China trade but it was more closely tied to the container leasing business 'and in this area we see significant downside', the house said.