Wednesday, February 7 1:54 PM SGT
MARKET TALK-HK: PCCW May Seek Submarine Cable Partners
1315 [Dow Jones] Pacific Century CyberWorks (0008) officials not available to comment on media report company seeking partners to develop its 1 CyberNetwork submarine cable project. Australia's Telstra, expected co-participant in project, reportedly not interested. With tight finances, PCCW unlikely to proceed with project alone; given likely glut in data transmission capacity, analysts skeptical about payoffs from project anyway. PCCW shares up 1.1% at $4.675.(IVW)
1300 [Dow Jones] HSI up 0.7% at 16023 midday in another slow trading day. Buoyed by European peers, telcos generally firm this morning; China Mobile (0941) up 1.4% at $49.60, Hutchison Whampoa (0013) up 1.5% at $101.50, Pacific Century CyberWorks (0008) up 1.1% at $4.675. Bank of East Asia (0023), to announce results tomorrow, down 1.4% to $20.65; closest rival, Dao Heng Bank (0223) also down 2.1% to $42.10, as expected strong results largely discounted. Trading likely to remain thin in afternoon; immediate HSI psychological resistance 16200.(IVW)
1245 [Dow Jones] STOCK CALL: Salomon Smith Barney cuts Hutchison Whampoa (0013) FY00-FY02 earnings estimates by about $5 billion/year on new accounting policy that will hit telecom and treasury income as well as lower earnings from core businesses. New NAV estimate down 35% at $94 with 12-month target price cut to $104 from $120; however maintains outperform rating. Shares up 1.5% at $101.50.(STT)
1234 [Dow Jones] Although positive on property sector, JP Morgan says property shares may fall in 2Q01 on oversupply in residential units and likelihood some developers may make provisions in their earnings in late March/April. However JP says investors should capitalize on any fall to load up on property stocks, because supply glut likely to dissipate in 1-2 years, and government policy towards HOS flats is clarified further.(IVW)
1225 [Dow Jones] Red-chip index recovers some losses from yesterday which were due to Beijing government intensifying crackdown on market manipulation; index now up 0.6% at 1172. China Everbright Limited (0165), which fell 3.2% yesterday on concerns its mainland brokerage unit may be hit by crackdown, up 2% at $7.75. Mild gains in most stocks, but volume thin suggesting stocks may fall again if there's more news about crackdown.(STT)
1213 [Dow Jones] Thanks to sluggish trading in broad market, investors switching to debutante Travelsky Technology (0696) with strong earnings prospects and fair valuation; stock now up 16% at $4.75, with buying through UBS Warburg and underwriter Goldman Sachs. Turnover heavy at $421.3 million, still topping most heavily traded list, followed by China Mobile (0941) at $304.3 million.(STT)
1207 [Dow Jones] Futures trader recommends accumulating short positions at 16050-16100 when intraday volatility increases. Says the longer futures market wobbles around 16000 amid slowdown in activity, the more likely there'll be selloff than upside breakthrough; still bearish on downside gap filling scenario at 15700. February futures up 0.8% at 16080.(STT)
1201 [Dow Jones] With recent range-bound trading pattern keeping medium-term players away, 15800 expected to remain strong psychological support for HSI, says futures trader at U.S. bank. HSI up 0.7% at 16027 while February futures up 0.9% at 16083 on light volume of 7,268 contracts.(STT)
1155 [Dow Jones] With U.S. interest rate outlook still unclear, JP Morgan-Chase, which expects another 125bp rate cut by August while noting some economists forecasting cut in February (before next Fed meeting in March), says we're still in early part of rate cut cycle; thus suggests investors continue to be overweight in HK property stocks.(IVW)
1143 [Dow Jones] Recent strong performance in utility sector suggests funds taking increasingly conservative view about market, says trader at JP Morgan. Says caution mainly due to risk of quick selloff in U.S. markets given rate cut already factored in. Utility subindex up 0.9% at 21539, mainly on HK Electric (0006); stock up 2.3% at $29.05 after rising 1.1% over past two days.(STT)
1138 [Dow Jones] With larger peers already trading at par or at premium to NAV, DBS Securities says New World Development (0017), now down 1.7% at $12.10 and at 21% discount to NAV, may catch up. Recent asset sale rumors, if true, may reduce gearing to 48% from 52%. With its high debt, probably one of most interest rate sensitive property developers; DBS estimates every 1 percentage point cut in prime rate will boost NWD FY02 net profit by 9 percentage points. Rates short-term buy, with target price at $13.(IVW)
1128 [Dow Jones] TVB (0511) down 0.9% at $42.70 on thin turnover worth $12.1 million. News TVB's (0511) pay-TV unit, Galaxy Satellite, may rent networks from Pacific Century CyberWorks (0008) and i-Cable (1097) rather than build one has little effect on stock given news long-expected. Analyst at European brokerage expects worries over TVB's pay-TV, which is expected to begin late 2002, to continue amid intense competition in cable TV industry; retains hold rating with $43 12-month target price.(STT)
1123 [Dow Jones] NEW LISTING: Travelsky Technology's (0696) compound annual growth rate to FY03 likely 20%, says ING Barings; notes by FY03 company should revert to 15% tax rate. Puts buy call with target price at $5.72 based on FY01 PER of 15X. Says net profit growth in FY01 will be substantially helped by reduced tax charge; operating profit growth likely 6% in FY01 and 12% in FY02. As company still in investment stage, expects longer-term operating profit growth of at least 13%. Stock up 6.1% at $4.35.(STT)
1120 [Dow Jones] China Motion's (0989) 51.28%-owned unit, ChinaMotion.com, has reached deal with several JV partners to release it from agreement agreed in September 2000. Compensation of mere US$38,300 unlikely to impact shares in China Motion, which posted 1H00 net loss of $237 million. Stock up 1% at 99 cents.(JZW, IVW)
1105 [Dow Jones] China shares mostly lower as downward correction continues; Shanghai B-share index down 0.54%, while its Shenzhen counterpart up 0.02%; both A-share indexes marginally lower. With regulators determined on further regulating markets, "correction will not end until April or May," says Shao Qiutao, analyst at Guosen Securities. A critical analysis by Xinhua News Agency of troubled retailer Zhengzhou Baiwen's restructuring plan has raised concerns other poor-performing listed companies might face difficulties in their restructuring efforts.(SMG)
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