Magnificent Estates

Stock code: 0201.HK

Last close: HK$0.26

By Marco Mak

There are two major positive implications for the company's hotel and property businesses from the financial secretary's 2008-09 Budget. First, the Hotel Accommodation Tax (HAT) will be waived within the 2008-09 fiscal year.

Currently, hotel guests are levied a HAT of 3 percent on hotel accommodation charges. Second, the government will, in the long term, try to relocate more of its offices to decentralized areas to make way for more grade-A office sites in core business districts for sale to the private sector.

The demand for decentralized office accommodations may increase.

The firm is one of the major operators of medium-tariff hotels in Hong Kong.

Waiving the HAT may mean that the company would have more room to increase its tariffs as demand is strong.

The company owns a newly completed grade A office building in North Point, providing a total gross floor area of 300,000 square feet.

We believe there is a good chance that the property will be sold in a block transaction. Based on a conservative average price of HK$5,000 per square foot, the property should be worth HK$1.5 billion, - more than HK$1 billion over its cost.

We have assessed the stock's fair value at HK$0.47 per share, based on a 20 times price-to-earnings ratio for its hotel business and a 10 percent discount to our valuation for the North Point office property.

A group company (ies) of Taifook Research Limited make(s) a market in the securities herein covered and/or any warrants or options on these securities herein covered.

The author is an analyst with Taifook Securities.

Pacific Basin Shipping Ltd

Stock code: 2343.HK

Last close: HK$12.90

Entry: HK$13

Target: HK$15

Stop loss: HK$12

By Castor Pang

Pacific Basin Shipping, as one of the leading handy-size shipping companies in the world, is equipped with a modern fleet and focuses on serving international commodity groups' needs for dry bulk shipment and logistical solutions.

The fast increase of iron ore and coal trade in recent months has pushed up demand for dry bulk carriers noticeably, resulting in a short-term shortage of handy-size shipping services and a possible increase in shipping charges.

Meanwhile, the firm's share price has begun to rebound from a low of HK$8.6 following the recent rise of the Baltic Dry Index, apparently reflecting the positive prospects of such shipping fleets' earnings brought by higher shipping charges.

It is believed that shipping charges as a whole have room to rise, and the firm's shares stand to reach new highs in the near future, possibly up to HK$15.

The author is a strategist with Sun Hung Kai Financial Group.

PCCW

Stock code: 0008.HK

Target: HK$5.20

(3-6 months)

Support: HK$4.29

Last close: HK$4.55

By Lai Wai-shing

PCCW has reported its 2007 profits attributable to shareholders stands at HK$1.51 billion, which is 20 percent more than 2006. Its annual dividend in 2007 is HK$0.2 by combining the HK$0.135 final dividend and HK$.135 interim dividend, while the dividend ratio would be 90.05 percent based on an earnings per share of HK$0.2221.

The author is a senior independent commentator.

(HK Edition 03/07/2008 page3)