Citigroup maintained its first-level (0142.HK) buying rating; the target price was lowered from HK$4.60 to HK$3.15 to reflect the recent weak performance of the group's listed subsidiary stock prices.

According to Citi, Savills's full-year core profit increased 28% from the previous year to US$239.2 million; the annual dividend per share was HK$0.09 per share, compared to HK$0.07 in fiscal year 2009. It lowered its earnings forecast for the 2009-2010 fiscal year by about 15%, mainly taking into account the current exchange rates of the Philippine Peso and Indonesian Rupiah against the US dollar.

Citi pointed out that management explained that Philippine Long Distance Telephone Company (PLDT, TEL.PH)'s investment in Meralco (MER.PH) is a necessary strategic move to maintain its market share in the Philippines. It can prevent San Miguel Corp. (SMCB.PH) from further increasing its holdings from 27% of its holdings, and can use Meralco's fiber network to launch a competitive broadband business; Metro Pacific (MPI.PH)'s investment in Meralco can also be an investment Other infrastructure projects in the portfolio have created synergies; once the deal is completed, Savills will hold more than 30% of Meralco's shares. The bank is still optimistic about PLDT and believes that Savills is a cheaper way to invest in PLDT.

Savills rose 12.36% yesterday to close at HK$3.00.