BROKER CALL - Merrill Lynch has raised its target price on Hutchison Whampoa Ltd to 98 hkd from 92 to reflect the company's strong financial position due to the improvement in the operations of its third-generation (3G) mobile phone services. The investment house said that the target price was also raised to show the strong share price performance of Hutchison unit Husky Energy. Merrill Lynch said it remains optimistic that Hutchison's 3G operations will achieve positive EBITDA (earnings before interest, taxes, depreciation and amortization) in the first half of 2007. It said the market remains skeptical about Hutchison, despite its UK 3G business having turned a positive EBITDA in Jan-Feb 2007. The brokerage noted, however, that Hutchison 3G's accelerating data growth, improving churn and falling subscriber acquisition costs (SAC) could help support earnings in the second half. It also said it lifted its 2008 net asset value estimate for Hutchison by 4.0 hkd to 109 hkd per share to reflect the strong rise in the share price of Husky Energy. Merrill Lynch has retained its ""buy"" call on Hutchison Whampoa.
At today 3:30pm, Hutchison is at HKD86.2o +3.20. TP for the HWL-C1 will be
RM0.90 with potential upside of 43%. HWL-C1 is calling at RM0.535.
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