Wednesday, February 7 3:30 PM SGT MARKET TALK-HK: PCCW Bottom Support At $4
1530 [Dow Jones] TECHNICAL ANALYSIS: PCCW (0008) up 2.2% at $4.725. Stock briefly penetrated this strong resistance early last week but unable to sustain gains. Stock needs to stay above level until end of week, says Dow Jones analyst John Wu, before there's sign of reversal of current downtrend. Adds still too early to predict direction, with bottom support at around $4. Convergence of Bollinger Band, which has continued for some time, suggests stock will become volatile soon.(JZW)
1524 [Dow Jones] Legend (0992) management tells JP Morgan it's not aware of any PC dumping by foreign vendors. JP expects price premium of 10% for foreign PC to remain; says competing OEMs for foreign vendors not enjoying cost advantage, and Legend has no plan to outsource production; believes PEG of about 1.2x not excessively demanding if company continues growing. Maintains trading buy; stock up 0.8% at $6.30.(IVW)
1520 [Dow Jones] Pacific Challenges recommends investors to sell Next Media (0282) after company confirmed it's looking to buy print media assets from Chairman Jimmy Lai. If Next pays for injection with new shares, minority shareholder stake will be diluted to around 15% from 44%. Following transaction Lai will also be required to cut his stake from 85% to 75% which will put further pressure on share price, says analyst Alan Hutcheson. Says fair value for Next 36 cents/share based on FY01 earnings of $405 million and P/E multiple 8.6X, giving 30% premium to P/E of peer Oriental Press (0018); recommends buying Oriental Press instead. Next down 3 cents at 42.5 cents, while Oriental Press up 1 cent at $1.25.(ASJ)
1517 [Dow Jones] Hutchison Whampoa's (0013) move to raise stake in JV with Andala SpA, which holds 3G mobile license in Italy, to 78.3%, according to document launched in connection with bond offering, shows it's serious about developing 3G mobile market in Italy, says analyst at European bank. With population of 57.3 million, Italy most crucial 3G mobile market after U.K. for Hutchison, although Italy much smaller than Germany and France (where Hutchison doesn't have any licenses).(STT)
1512 [Dow Jones] STOCK CALL: JP Morgan says TCL International (1070) stock's current discount to sector's average PER already reflects market's skepticism towards its move into PC manufacturing; thus maintains buy rating on stock as newly acquired PC businesses should supply faster earnings growth than its traditional TV operations, and share price to perform accordingly later; target price $2.375; stock down 1.8% at $1.60.(IVW)
1506 [Dow Jones] HSI stays in narrow range; up 0.6% at 16009 vs midday close at 16023. Turnover still razor-thin at $4.57 billion, indicating traders mostly sidelined. Utility sector continues to outshine, underlining caution among investors; moderate gains across the sector. "We are in no man's land," says salesperson at European bank; adds HSI likely to hover around 15500-16400 before next interest rate cut. Expects HSBC (0005) earnings due later this month to provide some stimulus.(STT)
1454 [Dow Jones] China Mobile (0941) may write off its obsolescent TACS system, with remaining book value of CNY2.4 billion, from its balance sheet in FY00-02. Move earlier than expected, says DBS Securities, and should speed up migration of TACS subscribers to GSM, which has higher ARPU; as of June 2000, China Mobile still had 2.72 million TACS customers. DBS says non-cash exceptional write-off won't affect valuation; maintains market-perform rating with target price at $46.50; stock up 1.2% at $49.50.(IVW)
1447 [Dow Jones] TECHNICAL ANALYSIS: After hitting all-time high of $19.20 last Thursday, HK Exchange (0388) has formed back-to-back dark cloud pattern on daily candlestick chart, says Dow Jones analyst John Wu, signaling relatively bearish reversal of previous rise. Stock attempting immediate 13-day moving average support at $18.40, as well as bottom of smooth rising wedge. Adds good chance stock will fall below that support and test next support at end of last major impulsive wave at $17.50.(JZW)
1443 [Dow Jones] Earnings results of soon-to-be-delisted FPB Bank (0717) yesterday showed NPL ratio down to 1.4% from 6.9% in FY99, highlighting Bank of East Asia's (0023) efforts to clean slate before taking over FPB, says Michael Siu, analyst at Salomon Smith Barney; Bank of East Asia controls 98.2% of FPB. Bank of East Asia's voluntary conditional cash offer for FPB Bank shares closed yesterday; FPB Bank shares will be delisted Mar 19.(STT)
1440 [Dow Jones] STOCK CALL: Zhejiang Expressway (0576) still attractive stock despite buying 18.4% stake in Shangsan Expressway for about 178% premium on its DCF value, JP Morgan says, because "strategic implication outweighs the premium paid"; believes acquisition will further enhance company's status in eastern Zhejiang province. Maintains buy call with target price at $1.72; stock up 0.7% at $1.36.(IVW)
1426 [Dow Jones] Long-end Hibor down a touch as market starts to price in another U.S. rate cut at March's FOMC meeting, says trader at local bank; adds 6-month and 1-year Hibor may fall to 5.0% in coming days. 1-year Hibor now at 5.10% vs 5.12% late yesterday.(MEW)
1422 [Dow Jones] Nikkei ends up 0.7% at 13366 on bargain buying by pension funds, investment trust funds and individuals, after 4 straight sessions of losses; also, sentiment bolstered by unexpectedly solid performance of high-tech sector. But Nikkei likely to stay pressured from supply-demand concerns for rest of week, says Hiroshi Sato, general manager of bond & equity department at Cosmo Securities.(KIX)
1412 [Dow Jones] Short-selling turnover up 16.7% at $102 million at midday but activity still thin as traders remain reluctant to place large orders. Hutchison Whampoa (0013) has $23.9 million worth of shares shorted so far, and Pacific Century CyberWorks (0008) has $19 million.(IVW)
1406 [Dow Jones] China industrial output growth expected to have slowed slightly to 9.75% on-year in January - lowest monthly result since January 2000, survey of economists shows. China's factories shut down for 1 week last month during Lunar New Year break. Data from State Statistics Bureau due this week.(OGB)
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