SELL China Telecom ICEA Securities Asia has lowered its rating on the mainland fixed-line operator to 'reduce', saying upside potential was limited after a 50 per cent surge in the counter over the past three months, surpassing the broker's $1.76 price target. Analyst Bertrand Chui said the growth in the personal handy-phone system had encouraged consumers to shift to cellular services, which China Telecom was unable to offer due to lack of an operating licence. In response to strong competition from mobile operators, China Telecom has been forced to cut prices. 'The market perception that China Telecom is immune from fierce competition seen in the mobile sector is wrong, in our opinion,' Mr Chui said. 'China Telecom's revenue growth is likely to be lower than management's target of 6 to 8 per cent year on year.' BUY Huaneng Power International Kim Eng Securities has maintained a 'buy' rating and revised upwards its full-year earnings estimates from 76 fen (70.87 HK cents) per share to 79 fen. The revision comes after the power producer announced 39.63 per cent growth in earnings for the first half. Analyst Edward Fung said: 'The strong growth rate was mainly due to an increase in power generation capacity and strong demand in its operating regions.' He said full-year power generation volume at Huaneng would likely be 4 per cent higher than his original estimate. Meanwhile, Mr Fung raised his fair value for Huaneng from $8.60 to $9.60. He set a price target of $11.60 for the counter, representing a 20 per cent premium to his estimated fair value. SELL China Eastern Airlines BOC International has maintained its 'underperform' rating, citing poor operating results. China Eastern said revenue passenger kilometres for the first half were down 20 per cent year on year, largely due to cuts in flights and discounts offered to attract passengers after the Sars outbreak. The drop came despite the restoration of 90 per cent of scheduled flights by the end of last month. But while domestic flights had been restored at a rapid pace, long-distance flights stood at just 50 per cent of pre-Sars levels. The airline did not expect the full restoration of flights until late next month or early September, the brokerage said.