MARKET TALK-HK: PCCW May Announce Strategy Soon
Thursday, March 29 11:06 AM SGT
1105 [Dow Jones] Outlook for Pacific Century CyberWorks (0008) shares depends on whether management reveals clear strategy in next 90 days to identify areas in which to boost EBITDA, says analyst at European brokerage; adds management expected to announce plans in 3 months. But some analysts maintain their bearish stance, saying with C&W PLC's 15.3% stake sale still looming, shares still vulnerable.(STT)
1058 [Dow Jones] China Unicom (0762) has mainland's second largest and probably "best quality" broadband network, says Deutsche Bank; with more than 56,000 km of high-speed fiber-optic cables, DB points out current data revenue run rate of CNY100 million per annum doesn't justify company's huge capex program. DB now rates Unicom as market-perform but given share price now below $9, may consider changing recommendation to buy; target price $11; stock down 2.9% at $8.30.(IVW)
1046 [Dow Jones] Pacific Century CyberWorks (0008) will post good revenue in future as company won't be threatened by competition for some time and will continue to enjoy pricing power as it shifts focus to high-margin businesses like IP backbone JV with Telstra, says Prudential-Bache; PCCW's revenue in core telecom services fell 7% in FY00, mostly due to lower IDD revenues on fierce competition. Shares now down 10% to $3.125.(STT)
1040 [Dow Jones] Heavy selloff in Pacific Century CyberWorks (0008), now down 10.8% at $3.10, mainly due to concerns about company's cash flow and ability to repay debt going forward, say analysts. Prudential-Bache predicts it might spin off or sell various divisions to fund outstanding US$4.7 billion loan; however adds it's unlikely to dispose investment portfolio valued at US$1.29 billion (after mark down) as investments integral part of company's overall business plan.(STT)
1024 [Dow Jones] Nikkei ends down 3% at 13348 midday on futures-led selling along with active sales centered on high-tech stocks following Nasdaq's 6% slide overnight; 13300 level expected to hold in afternoon. Falls also due to weaker-than-expected Japan February output data, amid lack of active buyers, as institutional investors, dealers reluctant to take fresh positions ahead of FY-end book close tomorrow.(YOT)
1022 [Dow Jones] HSI drops 1.5% to 12665 after U.S. stocks fell again overnight. Shocked by Pacific Century CyberWorks' (0008) $6.9 billion FY00 net loss (second largest ever by any HK listed company), many retail investors dumping their holdings, driving stock down 10.1% to $3.125. Woes in overseas telcos lead China Mobile (0941) down 2% to $34.40, and Hutchison Whampoa (0013) down 1.5% to $80. Johnson Electric (0179) and Li & Fung (0494), recently rebounding on apparent resilience in U.S. economy, down again after yet more profit warning from US; Johnson down 2.7% at %12.55 and L&F down 3.2% at $12.10. Immediate resistance for HSI around 12500.(IVW)
1017 [Dow Jones] Culturecom (0343) launches Linux-based Chinese Office 2000 at $1,000, vs $36,300 for Microsoft products with similar functions, hoping to attract small- and medium-size enterprises, says Sing Tao Daily; small businesses, many now using much cheaper pirated MS products, will be hit by new copyright legislation which comes into effect on Apr 1; although success of Culturecom's opportunistic offering still uncertain given most business users unaccustomed to Linux system, company's acute marketing sense may attract investors to its shares, which are falling today on general selloff; now down 1.3% at 37 cents.(IVW)
1011 [Dow Jones] Pacific Century CyberWorks (0008) tumbles 9.4% to $3.125, on heavy volume of 30.9 million shares, after reporting worse-than-expected FY00 earnings (FY00 net loss $6.91 billion vs FY99 net profit of $343.2 million). However, PCCW doing better than expected at EBITDA level despite erosion in IDD segment, which represents 17% of total revenue, and continuing pressure on mobile ARPU, says analyst at European bank.(STT)
1000 [Dow Jones] April HSI futures down 2.1% at 12595 after U.S. stocks fell sharply again overnight; March contract, now at 12625, expires today. Broker expects psychological support around 12500 but selloff may abate given traders already have substantial short positions.(IVW)
0958 [Dow Jones] Nikkei extends fall, down 3.1%, or 423 points, at 13343 on selling in high techs including chip makers and telecoms after Nasdaq slide overnight; auto makers also lower on concerns over earnings outlook. Next support at 13300 but index not viewed breaking this level.(YOT)
0953 [Dow Jones] Analysts hold mixed views on Pacific Century CyberWorks' (0008) projection of "single-digit growth" in revenue this year. One analyst says figures regarding underlying operations look decent as well as pledge to cut capex by at least 10% in FY01 from FY00's US$528 million would help achieve such growth. But another analyst says growth would be challenge amid competitive mobile telecom environment; PCCW posted 7% fall in core telecom services revenue in FY00.(STT)
0946 [Dow Jones] Greencool (8056) shares may outperform amid today's Nasdaq-induced general selloff, as company lays out plans to spend $350 million to set up units in Shanghai, Jiangsu and Ahnui, as reported by Sing Tao Daily; chairman says company has $800 million in cash; adds orders at hand already CNY450 million by February 2001 vs CNY107 million for first 9 months of 2000. Greencool one of most profitable GEM companies in FY00 (net profit CNY269 million); as parent Beijing Enterprises (0392) currently having no plans to reduce stake, Greencool shares may outperform.(IVW)
0941 [Dow Jones] Likely selloff in TMT stocks may drive HSI down 1.5% or more after Nasdaq sank again overnight, led by Nortel's profit warning; coupled with Fitch's downgrade of British Telecom and Deutsche Telekom, investors nervous about telco exposure may dump China Mobile (0941) and Hutchison Whampoa (0013), although both are financially sound companies. Pacific Century CyberWorks' (0008) FY00 net loss of $6.9 billion and $172 billion goodwill write-off may trigger selling by retail investors. If selloff permeates to banks and property stocks, HSI may again test support around 12500, says trader.(IVW)
0937 [Dow Jones] China's central bank governor Dai Xianglong foreshadows plan to ease controls on lending rates in bid to boost small and medium sized enterprises; but could be downside for banks who still developing modern credit risk control systems.(OGB)
0936 [Dow Jones] USD/HKD expected lower on month-end HKD demand, says trader at small investment bank; "it's not unusual to see players needing funds to cover their positions at the end of the month." Pair now flat at 7.7996.(MEW)
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