RESEARCH ALERT-Daiwa repeats buy on PCCW <1186.HK>
HONG KONG, March 1 (Reuters) - Daiwa Securities said on Wednesday it maintained a "buy" recommendation for Pacific Century CyberWorks Ltd (PCCW) shares after PCCW detailed its merger plan with Cable & Wireless HKT <0008.HK>.
"The merger gives PCCW full access and control over C&W HKT's telecom infrastructure in Hong Kong and the region," Daiwa analyst David Soh said in a research report.
"This will speed up PCCW's plans to roll out its now.com multimedia portal via C&W HKT's xDSL infrastructure," he said. Soh said C&W HKT's technical workforce would better equip PCCW to carry out expansion plans in the region, and at a faster pace. C&W HKT has about 13,600 employees and PCCW has 440 staff. PCCW may soon announce plans to cooperate with Chinese personal computer maker Legend Holdings Ltd <0992.HK> to provide broadband services in China, opening up quicker Internet-related opportunities in China for PCCW, he said. Shares of PCCW dropped HK$1.15 or 5.19 percent to close Wednesday morning at HK$21.00, and C&W HKT shares tumbled HK$3.00 or 11.56 percent to HK$22.95.
Soh said he viewed the merger as a positive move for PCCW but he did not give a price target for the stock. PCCW said on Tuesday it would make an all-paper offer of 1.1 new share for each C&W HKT share or an alternative combination of HK$7.23 cash and 0.7116 new PCCW share to C&W HKT shareholders in a proposed merger.
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