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2009-6-19 02:42:00 p.m. HKT, XFNA
DJ MARKET TALK: Daiwa Cuts PCCW To Underperform,Cuts Target 43.9%
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| 1432 [Dow Jones] STOCK CALL: Daiwa downgrades PCCW (0008.HK) to Underperform from Hold. "With the collapse of the privatization proposal and PCCW having returned to a company operating in a small, mature and highly-competitive market, we see no near-term reasons to buy the stock." Expects company to return to negative equity starting in FY09 after payment of HK$8.8 billion special dividend; notes no guarantee PCCW will continue to adopt high dividend-payout policy; says assumption of 50% payout would generate 4.9% dividend yield, quite generous but Taiwan telecoms offer better yield plays. Cuts target to HK$1.88 from HK$3.35 based on 9X FY09 PER, marking 26% discount to Asian integrated plays' average due to flat earnings outlook, corporate uncertainties. Cuts FY09-11 net profit forecasts by 5%-9% on lower interest income post-special dividend payment. Shares flat at HK$2.09. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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