PCCW, Hong Kong's phone company, will probably say first-half profit fell ten percent because it won't have one-time gains to match earnings it booked last year from currency swaps and other investments.
Net income probably fell to HK USD 865 million (USD 111 million) in the six months through June 30, according to the median estimate of five analysts surveyed by Bloomberg News, from HK USD 954 million a year earlier, including a HK USD 545 million one-time gain.
Control of PCCW, which is gaining market share in the fixed- line phone and pay television markets, is changing hands. Francis Leung, an investment banker, is buying 23 percent of PCCW from Richard Li, the younger son of Hong Kong billionaire Li Ka-shing, for HK USD 9.2 billion.
"If the results beat expectations, they could increase investor comfort with the fundamentals,'' Rohit Sobti, an analyst at Citigroup Global Markets Inc., wrote in a research report. While good earnings may help the stock, "the ownership issues will be the more pertinent catalyst in the short term."
Sobti, who rates PCCW a 'buy' with a price target of HK USD 6.05, said the company has attracted more than 500,000 subscribers to its NOW Broadband TV service and spending per user is increasing. The company is gaining fixed-line customers after years of losses, he said.
PCCW's shares yesterday fell 0.4 percent to HK USD 4.93 as of 10:02 a.m. in Hong Kong. The stock has risen 3.7 percent this year, making it the sixth-worst performer in the benchmark Hang Seng Index, which has gained 16 percent.
