The restructuring period is now behind us

It was a first! Since the circle of the "Les Echos" - Louvre management managers are, the managers were also majority at the table. Three against one! It was also a first for another reason, which is as important as the first... Never, since "Les echos" and Louvre management together managers of French values meeting only took place in similar circumstances. For more than three years now, the Paris stock exchange climbs. It may well mark a time or to make a step backward, but it leaves the front each time. The invitation to four managers who prefer to carefully select the titles they buy instead of starting economic or sectoral considerations before making their investment decisions in such value had more interest. It is in these moments, those where the (stock) world risk to switch, that investors are condemned more than at other times to be very precise and can no longer simply "playing" scenarios on the economy or sectors. The three operators and (only) Manager meeting Tuesday May 2 agreed on a general plan that exercise (the forecast of the evolution of the stock exchange) became particularly difficult. The four managers were Stéphanie Bobtcheff Oddo Asset Management, Dominique Cyrot AGF Asset Management, Stéphane ferrets in Dorval Finance and Claire Philipon in CCR shares. Three of them are interested in small and medium-sized values. The fourth, Stéphane Furet, hunt on the lands of the great values as values.

Since March 2003, the French market of shares does not stop up. The results of the business are meet. Each year, a strong theme leads the market. Last year, oil companies had filled this role. This year, small values derive market and continue to make the race at the top despite forecasts. Will this continue

STPHANE FERRET. The risk premium has been widely evoked two years and a half. Despite the escalation of prices since 2003, she simply reverted to its normative level. This may explain some of the indices rise observed since that time. Moreover, recent publications of the societies are located rather above the expectations of the market. Results forecasts higher revisions are possible for this year. We are only at the beginning of May 2006.

The political world is already entered in the election campaign. And the stock market

STPHANE FERRET. The possible consequences of the elections are not yet anticipated by stakeholders. The possible implications will be diluted in a now global market anyway. Most of the CAC 40 companies realize the bulk of their results outside France. This aspect there seems out to be more acute in the analysis of the investors.

STPHANIE BOBTCHEFF. I think it is important to reason at the level of global economic conditions. The biggest surprise lies in the fact that global growth continues and tends even to accelerate. This acceleration was not anticipated by the markets. In a context of strong enough increases of raw materials and strengthening of monetary policy, a slowdown of the global environment was possible. But the United States published their GDP in the first quarter of 2006, with growth at the highest for two years and a half. The IMF has revised upward global growth for the year 2007, despite the increase in raw material prices. Publications of the results of the companies also reflect this situation. They positively surprised economic analysts and more often lead to revisions to the Outlook for profits increase. The figures are good and even beyond the expectations of analysts.

CLAIRE PHILIPON. Growth is largely drawn by the United States and Asian countries. By contrast, it is not possible to say that the situation be flamboyant in Europe, even if it improves. Is a bit adjusted German growth rate, as well as in France. Europe still lags behind the United States.

Yet the French stock market is doing very well...

CLAIRE PHILIPON. The French market refuses to see the clouds that obscure the horizon. However, these clouds exist: the progress of the oil price, rising interest rates continued month after month... In addition, geopolitical risks persist at the international level. The France has been shaken by numerous events during the crisis of the contract first engagement (CPE) reflecting a real fear of the future. Clouds exist, but cloud not yet the stock market. However, a small event, such as a worsening of the situation in Iran, can trigger a reaction.

STPHANE FERRET. Since the beginning of the year nevertheless triggered a historically negative cycle for the European market, the dollar's decline. It reached 7 against the euro since the beginning of the year. Companies could show more pessimistic about their prospects of activities from the second half. By contrast, the dollar's rise observed in 2005 was proved very favourable for European companies. The future evolution of the dollar is now difficult to predict the extent where economic growth remains strong in the United States (even if the Fed is nevertheless considering a judgment of rising short rates), and where the ECB would gradually recover its own with the confirmation of the recovery in Europe.

DOMINIQUE CYROT. In any case, results and prospects for profits are increasing. As companies achieve very good results, they distribute dividends, and outstanding dividends. In addition, the price of real estate remaining high, investors refer gradually on the stock market. This finding is even more emphatic on the mean values: recipient growths are even higher.

STPHANIE BOBTCHEFF. The reading of the markets is difficult, because intersect positive and real risks. The growth of profits and upgradings remain relatively reasonable. The mentioned risks are not negligible. The inflation risk can weigh: the rising price of raw materials in a near full employment economy is worrisome. The inflationary pressures are likely to reappear. Even if the pattern of the FED, Ben Bernanke assured favour a break in the increase in interest rates, we tend to believe that its policy of rising rates will continue. Term, this policy could impact growth. It is possible to have a positive reading of the stock market, but do not neglect the risk factors. We are in a period hinge, which roughly translates as a more nervousness and increased volatility of markets. Their progress since the beginning of the year is considerable: 25 for indices mean values, already above progressions anticipated by makers early in the year.

What can happen now

STPHANE FERRET. As long as analysts continue to revise upward their forecasts of benefits, the risks of sharp decline in the market will be measured.

STPHANIE BOBTCHEFF. As long as the companies are capable of producing results at least online or even

higher than the expectations of analysts, the situation remains controllable.

CLAIRE PHILIPON. In my view, it will be too late.

What is it that today, you are concerned about the most The evolution of the dollar seems to be elle you concern

STPHANE FERRET. When the course of the dollar decline at the same time than long rates back fast and strong, historically the European market becomes riskier.

CLAIRE PHILIPON. The evolution of the dollar can encourage analysts to revise upward their forecasts of results.

STPHANE FERRET. It is not shocking that the market is taken into account for the moment because the consensus is already generally cautious on its expectations of growth in 2006 ( 7.5 on the STOXX) results.

What is your scenario for the coming months

STPHANIE BOBTCHEFF. We are faced with more uncertainty.

STPHANE FERRET. The visibility is low. End of 2005, the situation was less tense: the price of oil fell below $ 10 and the 10-year rate was 3.3 from 4.05 today. The environment hardens clearly in macroeconomic terms.

In view of these uncertainties, what are the values to which you give preference today

CLAIRE PHILIPON. I like Lisi. This family company manufactures attachment for the automotive and aeronautics systems. She had much to invest last year to cope with the demand of the aviation industry. But it expected to reap the benefits this year. Manutan International (sale professionals remotely) me please well also. This company, poorly known and which was somewhat derelict by analysts, it is reorganized in recent years while developing its Internet sales. It saves from several quarters of strong organic growth rate and its valuation remains very moderate. I still mention Steria (computer company). It is a cheap company whose organic growth rates are higher than those of Atos. The company is well managed, conducts its operations of development with serious and manifest a real ambition. Finally, I cite Bouygues. It is worth to watch closely, especially since his rapprochement with Alstom. Such an investment was not undertaken at random. For true synergies are possible.

DOMINIQUE CYROT. The constitution of a pole Alstom-Areva-Bouygues has again been mentioned.

CLAIRE PHILIPON. The logic for a company like Bouygues would be out of the telecommunications sector.

DOMINIQUE CYROT. For me, I like to Store Electronic Systems. This company makes electronic labelling of rays. If this technology is successful, it seems to me have interesting perspectives. Environment SA is also a value to be monitored. This small company is very profitable. Its activity is based on the development of tests for environmental features. It is therefore in a more regulated niche and growth rate is very important. I also continue my interest in companies such as Norbert Dentressangle and GL Event among others, companies with a real long-term of their trade. A company like Eurofins Scientific has also some assets, hoping however that new acquisitions does weigh not on numbers. Penauille enjoys attractive prospects for the airport service. I think finally that the Group Next Radio TV will be a great success: the audience figures are satisfactory. We have also invested in a small capitalization AST Group, which is the real estate promotion in Rhône-Alpes region.

STPHANIE BOBTCHEFF. Our portfolios are relatively concentrated and turning little. Alstom remains an attractive value to our eyes. The resumption of the participation of the State by Bouygues has formed a new positive element. The group is positioned on structurally markets in the medium term: energy and rail infrastructure. The restructuring period is now behind us. Alstom should continue to enjoy a very favourable newsflow. SR.Teleperformance, number two world centres of telephone calls behind Convergis, is a company whose results have been excellent in 2005 and should surprise positively in 2006. It is evolving markets in growth (from 5 to 10). This growth is driven by the fact that companies outsource their service calls. This job includes many variable costs, but margins can still advance by improvement to the business mix and a continuation of the relocation. Society bioMérieux (diagnostic in vitro) we are concerned by its "business model", which promotes excellent visibility (turnover recurring on consumables associated with the sale or the placement of the machines). New platforms have been launched with success: the company has made excellent numbers in 2005. However, the prospects for growth remain prudent and stable anticipated margins. The short term, it lacks a catalyst on this issue, which could be an external growth operation. We keep this folder in a medium-term perspective. Finally, the sector you in terms of fundamental, we are more comfortable on a company such as geophysics and crafts. The oil prices should remain high. Exploration expenses should continue to make progress for petroleum groups in the context of scarcity of resources. Geophysical Society benefits from the effects of its restructuring and the acquisition of Exploration Resources on its service trades; technological innovation-led growth of the industry. We therefore expect a continued organic growth and a strong recovery in margins in the next two years. The prospects in this sector are always attractive and were again confirmed by the recent acquisition by Schlumberger to its minority interests in Western Gecco.

STPHANE FERRET. Among the major values, a group such as Carrefour seduced us again. We feel that lower prices coming to an end in the large distribution, even if the France competitive environment remains difficult. We also support a refocusing of the group in the countries where Carrefour is located in the three first players and the development of the brand in markets with strong growth as the Algeria reserve. The stock status of the title should continue to recover in time.

We remain positive on Danone, which has just announced a turnover growth of 9 in the first quarter. 41 of its turnover is now made in Asia areas over the rest of the world where the growth is sustainable and visible for the group.

I also share the very positive view of the other participants on Alstom, which is one of our main lines in our two funds. In small values, we always appreciate Ausy (computer services), gradually back profitability to a sector itself carrier standards. Clasquin is also a potential record. This service company, transport agent, managing flows of complex goods between Europe and the rest of the world, takes full advantage of the globalization of the economy. Finally, we are buyers of Millet Innovation, small company specialized in the design and sale of technical products for care of the feet, destined primarily for seniors. This manufacturer has in our eyes of strong levers of growth in the network of pharmacies, less competitive than that of selective distribution, not only France but also in Europe.