About a year ago SHK Financial Group said it had upgraded its recommendation on Elegance International, which makes sunglasses, cases and frames for spectacles in China, from 'sell' to 'hold'. The broker said Elegance was benefiting as more European companies outsourced to Asia. If orders continued to show a good increase, it expected the company's gross margin to return to about 37 per cent in 2004 from 34 per cent in the first half of 2003. It forecast a net profit of $40 million for Elegance in 2004, compared with $56 million in 2003, and $60 million in 2005. Trading at 7.3 times estimated 2005 price/earnings, SHK believed the stock was attractive, given its dividend yield of about 9 per cent. It set a 12-month price target of $1.49. The counter was trading at $1.38 a year ago. Elegance reported its profit attributable to shareholders for the six months to September last year was $21.49 million, compared with $18.21 million in the same period of 2003. Earnings per share was 6.6 cents compared with 5.6 cents in the 2003 period. An interim dividend of 3 cents was declared. The counter closed at $1.19 on Friday.