April 3, 2001
Dow Jones Newswires
Goldman Taps 4 HK-Listed Cos For Top Five Asia Stk Picks
Dow Jones Newswires
HONG KONG -- Goldman Sachs has tapped four Hong Kong-listed companies for its list of the bank's top five stock picks in Asia, according to a research report issued to clients over the weekend.
The list includes Asia Satellite Telecommunications Holdings Ltd. (SAT), China Mobile (HK) Ltd. (CHL), China Unicom Ltd. (CHU), PetroChina Ltd. (PTR) as well as the National Australia Bank Ltd. (A.NAB), which is listed in Sydney.
Goldman said the stocks have all been battered during recent market turmoil and are now offering rock bottom prices and significant upside potential for investors.
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The five stocks all have strong fundamentals and each are trading below Goldman's estimated fair value price levels, the bank said in its report.
"These stocks have limited downside risk and significant upside potential," Goldman said.
Goldman blamed the stocks' slides on global sentiment rather than any company-specific fears and said all five companies will be able to weather any prolonged economic downturn.
Goldman said it continues to remain overweight on global equities in anticipation of a turnaround for the global economy midyear and because equities are undervalued at current prices.
It's bullish for regional equities based on expectations that the U.S. will witness a mild economic recovery and Japan will manage to "muddle through."
The bank does, however, warn that should the U.S. and Japan both fall into a recession, there will be greater risks for Asian equities.
Among its stock picks, Goldman has a 12-month target price of HK$72.00 for China Mobile, which is more than double the stock's HK$30.30 price early Wednesday, and recommends investors buy the stock if their investment horizon is longer than 12 months. Goldman said that due to global sentiment toward telecom stocks, China Mobile may not outperform the market in the near-term.
Goldman has a 12-month price target of HK$19.00 for China Unicom, which is more than double its HK$7.90 share price early Wednesday.
Goldman said the stock offers a great buying opportunity for longer-term investors and expects it will outperform the market.
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Goldman said PetroChina on virtually all valuation measures "is the most attractively valued integrated oil company."
The bank has a HK$2.00 12-month target price for PetroChina, which is trading at HK$1.36 early Wednesday.
Goldman said strong oil prices should lend support to the stock, though if oil prices weaken it will inevitably affect PetroChina's share price performance. The company also must continue to cut costs, it said.
Asia Satellite is also on Goldman's recommended list. It has a HK$35.00 target price for the stock, which is trading at HK$14.20. The company is expected to expand during the year though global economic weakness could slow new channel launches, Goldman said.
Meanwhile, Goldman has a A$32.00 target price for National Australia Bank. It said the bank has expansion opportunities unavailable to its peers and a strong new management team able to deliver "solid results."
However, it warns that softer economic fundamentals will likely impact loan growth, fee income and bad debt expenses for the bank.
In the same report, Goldman recommends investors sell HSBC Holdings PLC (HBC) at current levels, though if the share falls to HK$77.00 or below, Goldman recommends buying the stock. HSBC is trading at HK$90.00 early Wednesday. The bank's earnings face risk due to the economic slowdown, though Goldman still has a 12-month price target of HK$106.00 for the bank.
For another Hong Kong heavyweight, Hutchison Whampoa Ltd. (H.HUW), Goldman expects further downside due to the U.S. slowdown and the negative sentiment affecting tech and telecom shares.
However, it said, investors should scoop up the shares if they fall below HK$80.00. The share is trading early Wednesday at HK$78.50. Goldman has a 12-month price target of HK$125.00 for the share.
-By Kirsti Hastings, Dow Jones Newswires; (852) 2832 2337; kirsti.hastings@dowjones.com
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