About a year ago KGI Asia recommended a 'reduce'' stance on Shui On Construction and Materials (Socam), which deals mainly in building and contracting, renovation and fitting out. Socam had just posted a net loss of HK$17 million for the six months to September, reflecting the depressed construction and property sectors in Hong Kong. KGI said the contribution to the group of its core construction and building maintenance division declined 42 per cent to $833 million, while its pre-tax contribution also fell 59 per cent to $27 million. The broker said: 'Looking ahead, as the government intends to cut the supply of public housing and freeze the land supply for private housing, we expect that further pressure will be seen on Shui On's construction business in the coming six to 12 months.'' It expected the company to suffer a larger loss in the second half of 2003. In July Socam announced a net loss of $47.1 million for the year to March 31. Chairman Vincent Lo Hong-sui said he hoped the company could return to profit next year through cement operations in Chongqing and Guizhou and Shanghai property sales. The company's disappointing results came on the back of a $40 million provision for the fall in value of its stock portfolio and an investment property in Kwun Tong. It also blamed the downturn in Hong Kong's construction and building materials markets and the reduction in public housing works. Turnover fell 38 per cent to $2.31 billion. Last month Socam said it was in talks with controlling shareholder Mr Lo about the formation of a mainland property venture through an asset and cash injection of up to US$900 million. The counter closed at $10 on Friday.