Stockwatch - PCCW closes lower on Reach earnings concerns
17:28 04-FEB-2002
Pacific Century CyberWorks (0008-HK) shares closed lower in active trade on concerns over the earnings outlook for Reach, the company's joint venture with Telstra Corp, after brokerages projected losses for the unit, dealers said.
PCCW closed down 0.055 hkd or 2.71 pct at 1.97 on 123.17 mln shares.
The Hang Seng index closed up 30.07 at 10,721.32.
Australian-based ABN AMRO analyst Andrew Hines has forecast that Reach will post a net loss of 15 mln usd for 2001 under Australian accounting standards.
In a note issued last week, Hines said he expects the unit to report net loss of 100 mln usd for the four years to 2004.
An analyst at ABN Amro in Hong Kong, who declined to be named, highlighted that Australian accounting standards differ from Hong Kong standards, adding that the manner in which PCCW reports the unit's results will differ from the way Telstra will report.
Deustche Bank analyst Nigel Coe said that speculation that Reach could post a net loss for 2001 and going forward was likely behind the stock's falls in the absence of any other news on the company.
He forecasts Reach's EBITDA for 2001 will be 415 mln usd, while the figure for 2002 is seen at 360 mln.
Deutsche Bank has a "market perform" rating on PCCW.
An analyst with a regional brokerage also said concerns over Reach's earnings, which were prompted by the ABN Amro report, were behind the stock's falls during the session.
"PCCW is largely held by retail investors, who are more responsive to these small snippets of news, and often when you do get something like this, there is a bit of panic," she said.
An analyst with a European-based brokerage also said that the falls were a result of fears over the earnings outlook for Reach, prompted by the ABN Amro report.
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