Wo Kee Hong Recommendation: Buy Brokerage: G K Goh The company imports, markets and distributes mainly Japanese audio and visual equipment, air-conditioners, car audio and electronic products, along with other electronic and electrical products. Earnings for the first six months increased 35.9 per cent to $135.2 million and turnover rose 56.1 per cent. Rising living standards in China have contributed to the improvement in earnings. The company has expanded its operations in China by opening more offices and after-sales-service centres. Sales of commercial air-conditioning equipment were particularly strong. The company has won most of the contracts for commercial air-conditioners in the Pudong area of Shanghai. In addition, demand for laser disc players and LD software in Hong Kong has also increased substantially. The group also acquired 33 per cent of Technorient, the owner of dealerships for Ferrari, Lancia and Fiat cars, Uniroyal tyres, Kobe and Hagen batteries. The outlook looks good Tai Cheung Recommendation: Hold Brokerage: Vickers Ballas Tai Cheung reported net profits of $464.5 million for the year ending March 1993, ahead 45 per cent on the previous year. Contributions came from the sale of Eastern Harbour Centre in Quarry Bay, the remaining residential units at Wilshire Towers in North Point, and Whampoa Estates in Hung Hom, which collectively earned more than $440 million. Earnings from the Sheraton Hotel improved 18 per cent to $43 million, while sale of the group's 10 per cent interest in the Lee Gardens Hotel will realise dividends of $125 million - this will be booked in fiscal 1994. Currently, all Tai Cheung's developments in Hong Kong are geared for commercial/office use located in secondary areas, where demand is rising due to an overflow from the main business districts, and the influx of China firms. Earnings for fiscal year 1994 have essentially been locked in through the development and sale of Peninsula Square in Hung Hom for an estimated pre-tax profit of more than $1 billion. Looking further out, in the year to March 1995, three projects are scheduled to be completed together contributing pre-tax profits of $1.77 billion. The existing landbank will be exhausted by 1995, with only one project to be booked the following year making earnings prospects beyond 1995 less certain. With the premiums commanded at recent Government auctions, Tai Cheung will find it increasingly difficult and costly to replenish its landbank which will reduce development margins in the future.
