Restructuring efforts to lead to ‘ultrapure’ operating results?

– Due to the disposal of the Pharma Division, we cut our FY10 and FY11 estimates by 11% and 24%, respectively. However, in light of the significantly lower expected net debt burden (down from) EUR 54.5mn to around EUR 19.1mn as of December 31, 2009), we keep our target price at EUR 2.6 and confirm our Hold recommendation.

– CWT continued its clean-up work in 2Q09. Adjusted for one-off costs related to restructuring efforts, as well as losses from Swiss power projects, EBIT came in at EUR 3.3mn, giving CWT a rather healthy EBIT margin level of 4.1% in the continued operations Ultrapure and Municipal.

– Management has kept the operating cash flow stable. As of December 31, 2009, we expect that CWT’s gearing should be down to a modest level of 40%-50%.

– In the quarters ahead, CWT’s management will have to gradually build a track record by delivering undistorted clean operating results, in combination with a sound return on invested capital.