STOCKWATCH: Legend higher on technical rebound

HONG KONG (AFX-ASIA) - Legend Holdings shares were higher in midday trade on a technical rebound after the stock fell close to its support level of 5.20 hkd, with investors remaining upbeat about the outlook of the PC market in China, dealers said.

	    At 12:04 pm, Legend rose 0.15 hkd or 2.77 pct to 5.55 on trade of 8.67 mln shares, while the Hang Seng Index was up 174.50 at 13,633.68 on turnover of 4.03 bln hkd.

	    Edmond Cheng, an analyst with Core Pacific-Yamaichi International, said the recent market declines have dragged the stock closer to its support level of around 5.20 hkd.

	    Cheng said the company will no doubt continue to benefit from strong PC demand in China.

	    "As China is immune to the downward trend of the global PC industry, I expect Legend will post about 30 pct of an increase in net profit in the year to 2002," Cheng said.

	     With substantial growth in profitability, Legend is expected to trade at an earnings/price multiple of around 35 times, down from 80 times earnings in the year to March 2000 and 45-50 times in the year to March 2001, Cheng said.

	    Cheng said he rates Legend a "buy" and has a 12-month target price of 7.30 hkd.

	    "However, investors should pay attention to the U.S. PC sales data. Although China will not been affected by the global slowdown, any negative leads from the U.S. will undermine sentiment and Legend's share price," Cheng said.

Related stock : (NIL)