Cheung Kong Holdings Recommendation: Buy Brokerage: Standard Chartered AFTER entering into several joint venture agreements, Cheung Kong has been successful in expanding its development land bank to about 29 million square feet, including around four million sq ft of agricultural lots in the New Territories.
The group is benefiting from the booming residential property market, with a low cost land bank, and its stake in listed associate Hutchison has been lifted to 44 per cent.
A series of rationalisation measures - involving the troubled Husky Oil operation and its British telecommunications arm - is expected to result in a strong rebound in profit for Hutchison.
Cheung Kong is sitting on unrealised profits of about $6 billion from its investment portfolio and its net profit has been revised upwards by two per cent to $8.4 billion in 1993 and 18 per cent to $11.7 billion in 1994, making the stock attractive at a prospective price-earnings ratio of 11.7 in 1993 and 8.3 in 1994.
Shaw Brothers (Hong Kong) Recommendation: Buy Brokerage: Sassoon Securities SHAW Brothers' earnings in the next few years are expected to be derived primarily from rental income. In 1993, 82 per cent of operating profit came from rental income. In 1994, this figure should rise to about 89 per cent, largely due to the newly developed Golden Centre in Shamshuipo.
This property has been developed into a commercial and residential complex and we expect the commercial part of the building to bring a steady annual rental income of $3.8 million a year.