Upgrades and downgrades
BUY
SCMP Group
Credit Suisse First Boston has upgraded its rating on the counter to 'outperform' on the view its earnings have bottomed while the stock still trades at a near cyclical low. Analyst Marisa Ho has revised the group's 12-month target price to $4.20 based on a recovery valuation of 17 times next year's expected earnings. 'It would be too aggressive to forecast SCMP's publishing revenue returning to anywhere near its 1997 or 2000 levels. However, we do expect SCMP to participate in the economic recovery [the closer economic partnership arrangement] may bring in the medium term, as high-end advertising demand and the recruitment market recover,' Ms Ho said. CSFB's forecast now assumes the group's advertising revenue will grow 38 per cent from a low year-on-year base, with a moderate 20 per cent increase in the first half of next year, accelerating into an increase of 55 per cent or more in the second half. However, Lehman Brothers issued an 'equal weight' recommendation on the stock yesterday. Analyst Stephen McKeever said despite assuming a sharp recovery next year, SCMP's multiples looked full compared with global and regional peers. The counter closed yesterday at $3.475.
BUY
China Overseas Land & Investment
ING Financial Markets has maintained its 'buy' recommendation on the stock after first-half results revealed 18 per cent growth in profits to $212 million. Analyst Lilian Leung said with sentiment towards the luxury market in Hong Kong improving, the company would not need to make provisions, as opposed to her earlier assumed provision of $297 million for this year and next year. Mainland property development remains the firm's core profit contributor and growth driver. Ms Leung has raised her recurring earnings estimates by 1 per cent for this year and 16 per cent for next year, translating to 53 per cent and 72 per cent respectively on a reported earnings level, without assuming any provisions. She has a target price for the stock of $1.27.
