ANALYSTS in London warn that Trafalgar House may not yet be out of the woods, despite the financial rescue package announced this week. Yet some of their counterparts in Hong Kong have been quickly upgrading their 1994 and 1995 profit forecasts for Trafalgar House's dominant shareholder, Hongkong Land, on the back of an expected swift turnaround in the troubled British conglomerate's financial fortunes. The reaction to the string of announcements this week by the revamped Trafalgar House board has left analysts scampering in all different directions. Trafalgar House corporate development arm managing director John Fletcher has said he would be very surprised if the company did not from here on make profits. While the group's future does now seem a hundred times brighter, not everyone is convinced that the road to recovery will be as straightforward as the Trafalgar House board perhaps thinks. Tuesday's declaration of huge, but hopefully one-off, year-end net losses of GBP366.8 million (about HK$4.21 billion) came as no surprise to analysts who had been warned that major asset write-downs, property provisions and rationalisation costs were on the cards. Nevertheless, the sheer scale of the provisions took some by surprise. An operating profit of GBP77.5 million for the year was more than wiped out by a long list of exceptional items totalling GBP397.3 million. The new look Trafalgar House board also announced this week details of its proposed GBP425 million rights issue and placement, first mooted in October. This is aimed at restoring some sanity to the Trafalgar House balance sheet and giving it a strong platform from which to mount its campaign to regain its mantle as one of the most successful construction and engineering groups in the world. However, some analysts in London say they are not sure if the share offering will be fully subscribed. Hongkong Land has shown loyalty by saying it will take up its full entitlement to convertible preference shares under the GBP335 million rights issue for existing shareholders, which will cost it GBP90 million. It also says it intends applying for the additional convertible preference shares under the separate GBP70 million placement, but will get no preferential treatment on this score. Even if the rights issue and placement is fully subscribed, some analysts question whether it will be enough to restore Trafalgar House's strong dividend growth of the late 1980s, when it routinely paid dividends in excess of 18 pence a share. This week the board announced a two pence final dividend and said next year's dividend probably would be only one pence. Perhaps the most important announcement of all this week was the GBP300 million lending lifeline thrown to the group by HSBC Holdings subsidiary Midland Bank. With a stronger balance sheet, Trafalgar House has high hopes of further restructuring its borrowing and bonding facilities on more favourable terms. ''In principle it should secure the company, at least in the short term,'' says Andrew Mitchell, a London-based securities analyst with Smith New Court, of the share offering. ''But whether it's the end of the story is another matter. ''The question remains as to when the divisions recover and by how much. ''Construction is significant to the company, and the market is unlikely to be buoyant for some time.'' Michael Leary, property analyst for Lehman Brothers in Hong Kong, predicts considerable interest in the rights issue and placement. ''You are now looking at a much stronger Trafalgar House,'' Mr Leary says. He points to a sustained recovery in the construction and engineering industry worldwide and has upgraded his profit forecasts for Hongkong Land for 1994 and 1995 to reflect greater-than-expected contributions from its British subsidiary. Lehman Brothers now expects Trafalgar House's contributions to Hongkong Land's profits to be US$28 million for 1994 and US$46 million for 1995. Tim Storey, Hong Kong-based analyst with H.G. Asia, says: ''We have probably seen the worst from Trafalgar House and we are mildly optimistic about its future.'' The new-look Trafalgar House board, now dominated by Hongkong Land and Jardine faces, has carried out a major strategic review of the group's operations since seizing effective control in October 1992. The results of this were also announced this week, but overshadowed by the board's other headline-hitting revelations. It is to pull out of the depressed US commercial property market and will stop carrying out European resort developments. Trafalgar House's residential land bank in Britain will be replenished and enormous emphasis will be placed on boosting the group's infrastructure, engineering and construction business in Asia. The latter is seen as the cornerstone of the group's recovery.