Relief brought by the war (page 3 of 3)

Dresdner bank itself recorded a net loss of EUR 1.4bn and was the main reason for the group's overall weak performance.

The announcement to raise EUR 5bn in new capital increases fears of further rights issues in the sector. Allianz plans to do a rights issue to raise EUR 3.5 - 4bn and in addition they plan to issue a convertible of EUR 1.5bn. The crossholding of Munich Re and Allianz will be reduced from around 25% to around 15%. Although the capital increase is a long-term positive, we expect the stock to remain under pressure in the medium-term. We remain cautious on Allianz. The stock is very much geared towards the performance of the European market in general and the German market in particular. We would like to see a stabilisation of the fundamentals in the market and a reduction of the various interests Allianz holds in several companies outside its core business before we turn more positive.

JCDecaux (DEC FP; EUR 9.20) released strong results with a net income increase of 155% to EUR 26.0m in 2002 (CSFB estimate EUR 14.5m). EBITDA margin in the group's street furniture business reached 40.6% (CSFB 39.9%).

These results are very comforting as they clearly show that the company's street furniture business has not suffered at all from the current advertising slump. The shares have been weak over the last two weeks on the back of uncertainties regarding the advertising market and the opening of a judicial enquiry in Belgium. We believe the reaction has been overdone and remain confident on JCDecaux. They are the leader in street furniture, which offers high visibility and high margins.

SAP (SAP GY; EUR 79) was impacted by results from its US competitor Oracle. The headline level of Oracle's result was in line to slightly better than expected but the weakness in license revenues especially in Europe and the uncertainty reflected in the outlook weighed on the stock. SAP remains attractively valued in a global context and although the stock could remain under pressure in the short-term, we remain positive on its long-term prospects.

LVMH (MC FP; EUR 41.50) was impacted after the Swiss luxury good company Richemont (CFR VX; CHF 20.25) came out with a profit warning. However, it has to be noted that Richemont with its higher exposure in jewellery and watches is a more cyclical play than LVMH with its relatively larger exposure to leather goods. We remain positive on the stock as we believe that the company has proved that the luxury goods business can resist an economic downturn.

Vodafone (VOD LN; GBP 1.215) increased 20.3% since the beginning of the pre-war rally on 12 March and shows a YTD performance of 7.28%. In order to protect our downside we will shift our stop-loss from GBP 0.95 to GBP 1.15.