New legislation and the market risk (page 4 of 4)

The company published net income of EUR 22 million versus consensus forecasts of a loss of EUR 500.000. Celanese was negatively affected by the weak US dollar but pointed out that successful restructuring measures more than offset this impact. The company saw business improving in the second quarter compared to the first but remained cautious for the rest of the year even though full-year guidance was confirmed. We reiterate our buy rating on the stock but expect a sustainable recovery to be delayed. We believe that the strong management and the highly cyclical business Celanese is in make the stock attractive for investors who believe in an economic recovery led by the USA. Celanese generates more than half of its revenues in the USA. On an EV/EBITDA basis Celanese is trading at a discount of 36% on 2002 estimates and 23% on 2003. On a P/E basis Celanese is traded at a multiple of 16.1x for 2002 and 6.5x for 2003. We believe Celanese's attractive valuation should limit the downside risk from current levels. Celanese gained 12% for the week.

SAP (SAP GY; EUR 71.79) received a contract to develop supply chain software for Ford Motors and Caterpillar. The complete product will be developed and implemented at Ford pilot sites in about three years and is expected to reduce logistics costs and improve the companies' services for spare parts. This is one of SAP's biggest orders in about three years. During the earnings presentation SAP mentioned that contract volumes have declined due to reduced corporate spending. In that sense, this is good news but does not change the fact that companies will refrain from committing additional money to new projects until earnings start picking up