Hongkong Electric Recommendation: Buy Brokerage: Lehman Brothers HONGKONG Electric announced a 33 per cent jump in net profits to $1.73 billion for the six months to the end of June - well ahead of expectations. While most of the profits were generated from a 280 per cent jump in contributions from the company's 20 per cent stake in South Horizons, profits from electricity generation rose a healthy 14.5 per cent. The strong growth in unit sales (of electricity), up 10.1 per cent, suggests net revenue will continue to outpace permitted return growth. The stock is trading on a price-earnings multiple of 12.2 times for the 1994 financial year and remains the best value in the utilities sector. Champion Technology Recommendation: Buy Brokerage: Salomon Brothers CHAMPION is a vertically integrated telecommunications company with a focus on wireless technologies including multi-lingual paging systems and digital cellular technology. In 1993, the company's total revenues rose 101 per cent to $299 million. The group is actively targeting nearly half the world's population and expects revenues to continue growing rapidly, largely driven by demand for wireless technology in these companies. Its paging business continues to prosper in China, and more than 30 revenue-sharing arrangements are in place with paging stations, 15 of which have been operational for more than a year. Revenues in 1993-94, boosted by Multitone, are expected to increase more than twofold over the previous year's levels while earnings per share are likely to be up 25 per cent. Star Paging Recommendation: Buy Brokerage: Salomon Brothers STAR Paging has the second biggest paging network in Hong Kong with just over 190,000 paying subscribers following a 12 per cent increase last year. An increase in the number of subscribers of another 10 per cent is expected and, although overall growth is slowing, revenue per subscriber is growing via the increasing penetration of value-added services. Star Paging is also moving aggressively into the mainland with revenue-sharing arrangements with 12 PLA-backed paging networks and is looking at paging ventures in India, South Korea, the Philippines and Vietnam. The brokerage expects a 30 per cent increase in basic earnings per share and a 28 per cent increase in fully diluted earnings per share this year. World Houseware Recommendation: Buy Brokerage: Smith New Court THE next financial year should be another high-growth year for World Houseware. With group sales up more than 20 per cent and substantial cost savings from five newly installed PVC-sheet production lines, earnings in 1995 should reach $150 million, up 81 per cent on the year. The group recently took a 65 per cent stake in a joint venture with mainland parties to set up a pipe factory in Hubei to tap China's potentially huge construction material market. The brokerage estimates a net profit margin of 30 per cent with attributable earnings coming on stream to the tune of $20 million by 1996. Guoco Group Recommendation: Buy Brokerage: Yamaichi GUOCO is a likely candidate to replace Jardine Matheson or Jardine Strategic as a constituent of the Hang Seng Index due to its proven earnings record, growing market capitalisation and liquidity. Over the past five years the group has expanded considerably, with total assets growing at 35 per cent a year although there are no signs of over-expansion. Net profits are growing at 47 per cent a year with earnings largely secured by banking operations. The positive impact of the merger with the OTB banking group should have a dramatic impact on earnings. The group's diversification into property and manufacturing businesses will deliver an additional dimension towards long-term growth. Trading at a P/E of 11.6 times, the counter is attractive and has outstanding future growth potential.