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2007-1-19 05:39:00 p.m. HKT, XFNA
BROKER CALL - Hong Kong's Tai Cheung initiated at 'buy'; target 5.95 hkd - DBS
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HONG KONG (XFN-ASIA) - DBS Vickers said it has initiated coverage of Tai
Cheung Holdings Ltd with a ""buy"" call, and a price target of 5.95 hkd, on
expectations of a strong luxury residential market and sustainable growth in
the local hotel sector.
DBS said it expects the company's two luxury residential projects, one in
Chung Hom Kok on the southern part of the Hong Kong island and the other at
the Peak, to bring in ""significant"" returns, while its 35 pct owned
Sheraton-Hong Kong hotel is likely to offer steady contributions.
The brokerage said Tai Cheung currently trades at a steep discount of 51
pct to the stock's estimated net asset value.
It said that its apartment in Chung Hom Kok has been completed, while the
one at the Peak is scheduled to be completed around the middle of this year.
""Thanks to low development costs, these two luxury developments are
expected to contribute over 900 mln hkd in pretax profit and give a sharp
boost to the company's profit growth,"" it said.
DBS said it expects that the Sheraton hotel will contribute about 97 mln
hkd to the company's full-year earnings and rise to 107 mln next year.
It said that the anticipated buoyant luxury residential market should
bode well for Tai Cheung's earnings prospects and share price performance.
In today's trade, the stock closed down 0.04 hkd or 0.79 pct at 5.0.
(1 usd = 7.8 hkd)
leonora.walet@xfn.com
lw/net xfnlwm/xfnnt
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