MARKETwatch HSI ¡V 15,427.72 (+324.68) MARKET COMMENTS Having found support at 15,000, the HSI rebounded strongly, led by China Telecom, C&W HKT, Hutchison and Cheung Kong. The latter two were boosted by news that Hutchison is forming an Internet joint venture with US Priceline.com. Banking and property stocks were also stronger as the market has largely priced in a 25 basis point rise in US rates next month. Pacific Century Cyberworks rose 7% following its joint venture with CMGI in the US. With buying interest re-emerging, we think the market is likely to go up further today. RESULTS REVIEW Legend Holdings (992) FULLY VALUED $21.40 Legend reported a 58% increase in net profit on a 46% increase in turnover for the three months ended December, totalling $320.8mn for the first three quarters. The results were significantly above market consensus. As a result, we have revised up our FY00 earnings forecast by 9% to $405mn. Although analysts are likely to revise up their earnings forecast for Legend and this will support the share price, we believe that Legend is fully valued at current levels. PC Market Share Continued To Improve. Legend PC was the major earnings contributor, as sales shot up 78%. Sales for commercial and home PCs surged 60% and 90% YoY respectively. For the first-three quarters, Legend sold 1.04mn computers, in line with its year-end target of 1.2mn units. Management estimates that Legend PCs¡¦ market share increased to over 25% in the 4Q of 1999, from 22.9% in the 3Q according to IDC. However, gross profit margin decreased from 13.1% in the first half to 12.5% due to shortage of components. Conduct Business Through The E-Commerce System. Inventory turnover cycle improved further from 30.1 days in 1H to 23.5 days. We believe that the improvement can be attributable to the e-commerce system launched in 1Q00. Currently over 80% of sales of Legend PCs are handled by the E-commerce system that is connected to 300 key distributors and dealers. SI Business Under-Performed. In the 3Q, sales in SI dropped 33% to $305mn. According to the management, Legend has made some personnel changes for streamlining the business. However, results of the operation are likely to be affected in the short term. Profit Forecast Y/E Mar Net Profit EPS EPS PER DPS Yield ($mn) ($) Gr.(%) (x) ($) (%) 1998 205.2 0.125 - - 0.015 - 1999 275.3 0.159 27.1 134.7 0.05 0.2 2000F 405 0.229 43.9 93.6 0.065 0.3 2001F 532.6 0.297 29.6 72.2 0.065 0.3 2002F 645.3 0.359 21.2 59.6 0.065 0.3 Source: Dao Heng Securities estimates Finet Online Research Hub is designed for your reference only. The recommendations in the reports are not meant to urge for a buy or sell decision. Finet Holdings, Finet Online and the research providers do not guarantee the accuracy, veracity or completeness of the information provided in the Research Hub. Finet Holdings, Finet Online and the research providers will not be responsible for any errors or omissions in postings or for any results obtained from the use of such informatio bitte um meineungen |
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