UBS cuts SGS rating

UBS cuts SGS rating

ZURICH (Reuter): Union Bank of Switzerland said it cut its
recommendation for shares of inspections company Ste Generale de
Surveillance to "sell" from "hold" on expectations the company
had lost contracts with Indonesia and Pakistan.

"We believe that the price does not sufficiently reflect the
worsened outlook for earnings and revise the stock from hold to
sell," it said in a research report.

It said it did not expect SGS to be able to conclude a new
imports inspection contract with Indonesia, which UBS said
accounted for some 10 percent of sales.

A contract with Pakistan worth an estimated 87 million Swiss
francs also seemed lost.

"On the basis of sales that will drop away, we expect profit
to fall around eight percent in 1997 and to rise only around six
percent in 1998," it said. "Surveillance should regain its
customary growth level only in 1999."