Hysan Development Recommendation: Buy Brokerage: Sassoon Securities TO maintain earnings growth this year, Hysan is likely to continue to sell low-yield and ageing properties. No 3 Garden Terrace is the next candidate on the list.
Given the current strength of the residential market, the building could be sold at above $5,000 per square foot, which would allow a profit of about $700 million. However, if No 3 were not sold, earnings per share for the group would decline 27 per centthis year.
Hysan depends primarily on property disposals to drive profit growth, which adds to the uncertainty in predicting its earnings. Nevertheless the group will return to sustainable growth from next year onward, buoyed both by the positive rental reversion from its existing investment portfolio and the completion of new property investments.
Hang Seng Bank Recommendation: Hold Schroders Securities RESULTS this year were generally in line with expectations. Interest income declined because of lower interbank rates and overall net interest income was unchanged. A major part of the growth in earnings was from asset sales, which netted $1.8 billion, and from lower provisions.
Advances grew faster than expected at 16 per cent due to good trade finance business as well as the impact of strong IPO demand. Deposits grew only six per cent.
The share has retreated 30 per cent from its high but, given the likelihood of slow earnings growth in the next two years, a still lower rating may be in store. Support is seen at $55 and selling pressure at $65.
Wing On Company Recommendation: Buy Schroders Securities COMPANY management recently revealed that contributions from share investment were much larger than expected due to Hong Kong's bullish stock market last year. Thus, the brokerage has revised '93 earnings from $237 million to $280 million, representing modest growth of 0.3 per cent over 1992.