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SCMP Reporter

SELL BOC Hong Kong (Holdings)

Closing price: $14.70

Target price: NA

Share price performance (%)

1wk: 0.67

3mths:20

1mth:5.76

1yr:79.26

While Merrill Lynch remains supportive of management's progress on IT and business mix initiatives, valuations are stretched and it believes it is 'prudent ...  to take profits'. Also, two of BOCHK's  shareholders - Bank of China and Standard Chartered - have recently reduced or sold their stakes.  Merrill lowered its call  to 'sell' from 'neutral' as  a  recovery in earnings this year is 'more than adequately reflected in bank sector share prices'.

Merrill Lynch

BUY China Pharmaceutical Gp

Closing price: $2.575

Target price: $3

Share price performance (%)

1wk: 0

3mths:8.03

1mth:5.1

1yr:56.06

China Pharmaceutical has 'seriously lagged behind' other China stocks,  but much of the bad news is now priced in. Also,  thin gross margins of 15 per cent to 20 per cent  may quicken consolidation in the sector,  said analyst Mabel Wong. If Sars recurs, positive  sentiment towards drugmakers should provide strong share price support, she added.  Ms Wong has raised her target price  to $3 from $2.50 and lifted her recommendation to 'outperform' from 'underperform'.

CLSA

BUY Huaneng Power Int

Closing price: $13.35

Target price: $16.35

Share price performance (%)

1wk: 7.86

3mths:14.46

1mth:18.37

1yr:111.4

Earnings forecasts  were raised by 11 per cent for this year and 9.4 per cent for next year in response to higher tariffs  and  persistent power shortages in China. Huaneng was allowed to sell excess  output at rates equal to last year's average on-grid tariffs in its service area.  Analyst Alice Hui said  this would  benefit Huaneng, noting that one  plants  incurred  big losses in 2002 due to low excess output prices.

UBS



UPGRADES AND DOWNGRADES