Shenzhen International

Stock code: 0152.HK

Last close: HK$0.82

Entry: HK$0.80

Medium-term target: HK$1.10

Stop loss: HK$0.67

By Patrick Shum

Shenzhen International pressed ahead with internal restructure in the past years by selling China Southern Glass stakes and increasing stakes in Shenzhen Expressway.

The company is expected to further sell its shares in China Southern Glass for enough cash to develop its logistics center business and maintain its high dividend payout.

Shenzhen International now runs logistics centers in South and West China and Nanjing in East China. The land coverage of the three centers is expected to increase at least 10 times by 2010.

Logistics and expressway businesses have become the firm's major revenue engine, apart from one-off gains in asset sales.

The price-to-earnings ratio now stands at 5 times, showing an upside potential in medium term.

Investors are advised to buy at HK$0.80, with a medium-term target of HK$1.10 and the stop-loss level of HK$0.67.

The author is the executive director at Karl Thomson Investment Consultants Limited.

Lenovo

Stock code: 0992.HK

Last close: HK$5.85

Entry: HK$5.80

Target: HK$7.30

Stop loss: HK$5

By Castor Pang

Lenovo has maintained its leadership on the mainland with a market share of 30 percent.

It's prospects look rosy on the mainland, where the popularity of computers stands at the low level of around 10 percent, and consumers and businesses are willing to spend more on computers given its robust economy.

Its expansion in other Asian markets is also progressing well. Its market share in Taiwan province rose to 6.5 percent in the last quarter of 2007, up from 1.6 percent in the first quarter that year.

That shows that its development strategy in the market has been successful..

In addition, the computer maker plans to tap Middle East and Turkey markets, where the popularity of computers is still low. This will help maintain its earnings growth in the long run and will support its share performance.

Investors are advised to buy at HK$5.80, with a target of Hk$7.30 and the stop-loss level at HK$5.

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

ICBC

Stock code: 1398.HK

Last close: HK$5.85

By Paul Lee

ICBC remains one of our preferred stocks for exposure to the China banking sector, as we believe it is the best positioned to weather the ongoing austerity measures to cool the mainland economy.

We believe subprime exposure is no longer an issue for ICBC. As at the end of FY07, the group was still holding on to $1.23 billion of US subprime mortgage-backed securities (MBS) with a credit rating of AA- and above.

The group has provided $400 million on such securities, which have a fair value loss of some $357 million as at end-FY07.

In addition, ICBC has made some $35 million in provisions on its $55 million worth of structured investment vehicles (SIVs).

Further provisions on the exposure are thus unlikely to have any significant impact on ICBC's bottom line.

The FY08 loan quota for ICBC has been set by the People's Bank of China at 365 billion yuan, implying a loan growth of some 9 percent for the year, down from 12 percent last year.

While there is a possibility of a fall in fee income and a squeezed margin as low-cost demand deposits migrate to higher-cost time deposits alongside a correction in the A-share markets, there has been no evidence of this happening from data coming out of the first two months of FY08.

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.

China Resources Power

Stock code: 0836.HK

Last close: HK$16

By Anna Yu

We maintain our buy recommendation on the red-chip power producer, though we downgrade our target price from HK$27.26 to HK$23.60 after reviewing its FY07 results, and taking into account the suspension of operations at its Hunan power plants due to the snowstorms earlier this year.

Thanks to a robust 72 percent year-on-year growth in power generation, CRP's top line jumped by 73 percent year-on-year to HK$16.8 billion for FY07. Operating profit grew a moderate 68 percent year-on-year to $4.3 billion with a slight decline in operating margin to 25.5 percent from 26.2 percent in FY06.

After a 90 percent surge in finance cost, net profit grew only 36 percent to HK$3.2 billion (earnings per share: HK$0.82) but was in line with our estimate.

As 90 percent of CRP's coal consumption requirements were fulfilled by contracts last year, the average unit fuel cost only rose by 2.3 percent year-on-year despite a drastic uptrend in coal prices. Besides, the average coal consumption was reduced by 7g/KWh, or 2 percent, to 338g/KWh.

According to management, about 90 percent of coal consumption for FY08 will continue to be satisfied by contracts, locking up a 9 percent year-on-year price increase. After a further reduction in coal consumption, the growth of the unit fuel cost for FY08 is expected to be contained within 7 percent year-on-year, much lower than our estimated 15-20 percent increases for other mainland power producers.

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.

(HK Edition 04/21/2008 page2)