BUY
Li & Fung ING Financial Markets has maintained its 'buy' rating on the outsourcing agent because the United States economy is improving and it is capturing new customers and higher-margin businesses. Analyst Amelia Mehta said US retailers had better than expected sales and healthier inventories in the back-to-school season, and consumer surveys point towards recovering sentiment, which bodes well for late Christmas and spring 2004 orders. Ms Mehta expected licensing agreements to feature in Li & Fung's next three-year plan. ING set a $16 target price based on the stock trading on 25 times next year's expected earnings.
HOLD
Guangzhou Pharmaceutical Core Pacific-Yamaichi has resumed coverage on the Chinese medicine firm with a 'hold' rating, because even though its first-half turnover grew 19.2 per cent year on year to 3.58 billion yuan (HK$3.35 billion), net profit fell 9.6 per cent as sales of its high-margin drugs declined on a fall in hospital purchases in Guangdong. Analyst Jeff Wong expected the stock to maintain double-digit revenue growth, possibly in tandem with a 20 per cent estimated industry growth rate. However, as it is trading on 18.8 times forecast earnings, Mr Wong urges caution until clear signs emerge of new growth.
SELL
China Eastern Airlines BOC International has maintained an 'underperform' rating on the carrier after it announced dismal first-half results where it lost 1.25 trillion yuan. Analyst Michael Chan said its second-half outlook did not look promising and, despite a strong rebound in traffic, its passenger yield has become a key concern in the third quarter given the deep discount on airfares. He said the stock was trading above its historical average of 0.8 times book, a valuation he regards as demanding and believed the market had priced in all the good news, therefore additional upside was limited.