Tai Fook maintains its far East Development (0035.HK) buy rating, giving it a target price of HK $4.01.

Dafu said it expected FEDC's fully diluted net asset value per share to be HK $7.28 in fiscal 2011, equivalent to 13 times forecast earnings. The stock closed yesterday at a discount of about 71 per cent to Dafu's projected net asset value, which means the stock is seriously undervalued as the company continues to expand its business and has value-added investment activities in the long run. Dafu pointed out that far East Development currently operates 14 hotels with 3600 rooms in Chinese mainland, Hong Kong and Malaysia, and the number of rooms will continue to grow.

The stock rose 1.4 per cent to HK $2.16 on the day.