Bank Hapoalim analyst Rachel Levison sees much added value in the gaggle of startups in which

Koor Industries

(NYSE:KOR) has invested, not to mention in its quality managerial echelon. Which hasn't stopped her from downgrading the dual-listed conglomerate from Buy to hold, and setting a price target of NIS 328, about 27% above the market.

Koor is implementing a new strategy that would transfer the conglomerate's center of gravity from

ECI Telecom

(Nasdaq:ECIL) to Koor Venture Capital. But, Levison writes, most of the value of Koor stock is still comprised of ECI and Tel Aviv Stock Exchange-traded chemicals company Makhteshim Agan. Both ECI and Makhteshim Agan stock can be obtained on the capital market without investing in Koor itself.

Levison calculates that Koor will report revenue of $1.5 billion in 2001 and earnings of $1.17 per share.

The proof of the pudding

The average 2001 multiple of companies in ECI's field

Lucent Technologies

(NYSE:LU),

Nortel

(NYSE:NT) and

Marconi

is 37, she writes.

But considering that ECI has yet to prove that its focus on high-growth fields will indeed improve its results, Bank Hapoalim deems the proper multiple for ECI is 20, extrapolating to a company value of $2.2 billion.

Levison calculates the value of Makhteshim Agan at $938 million, based on a multiple of 15 for the coming year. Moreover, she believes that in the medium-long run, Koor may sell its holdings in the chemicals company or bring in a strategic investor in order to tighten its focus on technology.

Then there's the Elisra group, which Levison estimates is worth $300 million, based on a multiple of 15 (lower than the sector average) and on earnings of $20 million a year.

She evaluates the Telrad group at a somewhat higher $350 million, based on the deal in August where Nortel sold Koor its entire 20% interest in Telrad for $45 million, plus the value of Telrad's holdings in Be Connected, a startup that recently raised capital from

Cisco Systems

(Nasdaq:CSCO).

Levison assesses Koor's venture capital activities at $90 million based on its cost of investment. She notes that to date Koor Venture Capital has handed over $16.5 million to VC funds, out of a committed $80 million over four years. It has also placed $73.5 million in companies, including $8 million in Scopus. Some of its portfolio companies, such as Orsus and 3G.com, have already raised additional capital, at higher valuations than when Koor invested.

Levison sums up that several months will pass before Koor can derive value from the splitup of ECI into five independent companies, or from its technology investments through Telrad and Koor Venture Capital. Not only are conditions on the world markets cold, she writes. Israel's security situation continues to hamper investments in Israeli companies.