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Analyses Financières

• What is Sapec today ?

5/1/2000

Summary

* In August 1998, we wrote a report on Sapec with a Buy recommendation. Since then, the share has lost around 18% of its value. Our purpose with this note is to explain the changes.

* Sapec has been deeply radically transformed over the last 18 months. A major move has been just announced disposal of its substantial and historically significant fertiliser activity, currently running at a loss. This is a good decision in our view, providing Sapec, as it does, with EUR 23m, to be invested in more promising fields. Further, with this disposal , Sapec can move away from its not-so-attractive image as a fertiliser producer.

* Another major move was the acquisition of Agrides in Spain, signalling the turn towards the higly profitable health plant product business. The Spanish market could fulfil Sapec's ambition to generate a sustained growth in this sector for the company.

* In logistical services, Sapec was able to participate in the privatisation of two port handling concessions in Portugal. Turning them around will be major challenge for 2000.

* The It sector has also witnessed sapec shifts. The Company sold PC distributor Prologica to Systemat, and disposed of Burotica, set up at the end of 1998. On the other hand, Sapec has acquired 6% in the parent company Zetes Industries. The Cap Gemini Portugese joint venture is going well.

* All in all, Sapec now has a more focussed portfolio, although it is still contains some diversity. Considering each activity separately, we no longer see trouble spots, although the company's port handling activities have still o turn in a profit following privatisation. The company is healthy; both financially and otherwise, and is ready to take on new development projects, especially in Spain.

* It remains to be seen when and if investors will regain appetite for small caps. This is the main drag on the share price.

Loïc de Caters

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