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Analyses Financières

Pulp up the volume

18/9/2000

SAPEC (Agro Chemical - EUR 47.1 - P/E00 = 13.4x - P/CF00 = 6.5x) - 1H00 current results affected by the deconsolidation of the business unit IT (17% of the 1999 pre-tax current earnings), while port terminal activities contributed negativity as the moderniasation plan should be progressively implemented. EPS00 revised down to EUR 3.52 (-10% y-o-y) and CFPS down 12.6% to EUR 7.27. Even though the current share price does not discount the fact that company's risk profile has considerably changed since the group is not longer involved in the fertiliser sector, we prefer to adopt a neutral position on this share, waiting for a better view on the true potential of the port handling business. Rating cut to "HOLD"

* Sapec's 1H00 net results show a strong increase on a y-o-y comparaison (up by 16.2% to EUR 7.37m), is due to a EUR 5.02 m capital gain on the disposal of Sapec's stake in Cap Gemini Portugal.

* Before exeptional items, net current earnings (group share and before goodwill amortisation) drop by 14% to EUR 2.54 m (EPS of EUR 1.79), the main reasons for these low results are the deconsolidation of the IT sector (Cap Gemini Portugal and Prologica), which accounted for 17% of the groups pre-tax current earnings in 1999, and the negative contribution (of EUR 0.52m at the pre-tax current earnings level) of the port handling activity. At the beginning of this year (see MF of January 6, 2000) Sapec has been granted (in partnership) three concessions for container port terminals in Portugal, as part of the privatisation process in this country (two in Lisbon and one in Porto). A modernisation plan is currently under implementation. All other BU's improved their performance on a y-o-y basis.

* We have revised our EPS00 downloads and expect now a decrease of 10% at EUR 3.52, while CFPS00 is expected to amount to EUR 7.25 (down 12.6% y-o-y). At the bottom line level, Sapec should stabilise its earnings thanks to a capital gains

* Despite its strong performance since Dec. 17 (20.8%) when Sapec announced the disposal of its stake in AdP, the share still trades at undemanding ratios. This is partially due to its poor liquidity. Even though the current price does not dicount the fact that the company's risk profile has considerabily changed since the group is not longer involved in the fertiliser sector, we prefer to adopt a neutral position on this share waiting for a better view on the true potential on the port handling business. As result, we rerate the share as a "HOLD"

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