Hong Kong CTS: 6-month target price 1.20 yuan sell

China-Hao Capital incident: Human swine flu outbreak hit Hong Kong tourism. The chairman of the Hong Kong Tourism board announced that visitors to Hong Kong had increased by 1.4% per cent in the first 4 months of 2009, but were affected by the haze of human swine flu and the first 10 days of May were down by 9% per cent a year.　　The strong growth in the number of visitors to the mainland has increased by 11.6% in 2007, and 4.7% per cent in 2008.　　The executive director of the Hong Kong Hotel Owners Association said May Hotel rentals in Hong Kong fell by more than 20% in the year, while some five-star hotels were below 50% occupancy rates. The average occupancy rate in Hong Kong fell from 84% in the 1th quarter of 2008 to 79% in the 1th quarter of 2009, compared with an annual decline of 14% per cent in the 1th quarter of 2009, affected by the global recession.　　Between 2004 and 2008, the occupancy rate of Hong Kong hotels ranged from 85% to 88%. According to the Hong Kong Tourism Board, the total number of hotel rooms in Hong Kong (including hotels) will increase by 9% in 2009, 5% in 2010 and 5% in 2011.　　However, the number of overnight guest growth has fallen from 8.4% in 2007 to 1% in 2008.　　The demand for an oversupply of hotel rooms and a drop in visitor arrivals will seriously affect the profitability of hoteliers and travel agents over the next few months.　　Hong Kong's share price has risen 15% per cent since its 2008-year earnings announcement in early April, outperforming the state-owned index of 3%. The bank forecast a net profit of $438 million in 2009, earning 7.5 cents per share.　　Hong Kong's current share price is equivalent to 23.3 times times the expected earnings ratio, which the bank considers to be too expensive compared with other Chinese stocks. Hong Kong CTS is now trading at a 13% per cent net asset value of $2.02 at the end of 2008.　　During the 2003 SARS period, its share price was only 50% per cent of the net asset value. The bank maintains a selling rating and the target price does not change to $1.2, which is equivalent to 16 times times the 2009-year P/E ratio at the end of 2008.