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Koor Industries

(Nasdaq:KOR) is traded at a 40% discount, rules investment house UBS Warburg.

UBS Warburg rates the Koor conglomerate a Buy and set a price target of $12, about 54% above the market. Analyst Stephen Levey writes that at the current price of $7.8 per share, Koor stock is attractive. Its 40% discount is the widest in two years, Levey concludes, and believes Koor shares will shortly stage a strong comeback.

Levey believes that CEO Jonathan Kolber made several strategic mistakes. The worst one was high price he paid for a 33% stake in

ECI Telecom


Koor paid $725 million for the one-third interest, whereas ECI's market cap is down to about $630 million today. Levey assesses that shares of ECI and of Koor agrochemicals subsidiary Makhteshim Agan (59%) will reverse to post gains this year. As the two companies contribute 50% of Koor's asset value, Levey sees their recovery helping Koor to close the discount at which it is traded.

The analyst believes Makhteshim investors over-reacted to the crisis in South America. Its sales to the Brazilian market are expected to rise from $270 million in 2000 to $290 million in 2001. Levey thinks Makhteshim shares will outperform the market in 2001, and therefore reiterated a target of NIS 13.1, which is 55% above the market. He believes Makhteshim will benefit from investors abandoning hi-tech for the charms of traditional industries such as chemicals. In summary, Levey recommends that every Israeli investor should have some Makhteshim in his portfolio.

Light at the end of ECI's tunnel

After ECI's record losses of $120 million for the fourth quarter of 2001, Levey sees light at the end of the the company's tunnel. He posits that ECI will rally in 2001. Spending on its companies in the United States will shrink from 30% of ECI's total capital investment in 2000 to 8% or 10% in 2001.

Money not invested in the American companies will be routed to Europe, which is ECI's chief market. In summary, Levey believes ECI shares are attractive and reiterates his Buy rating. He sets ECI's price target at $15, which is about double its level on the market.

Levey foresees that Koor's fully-owned subsidiary Elisra Tadiran will issue on the public market when the time is ripe. He places its profit multiple at 12 and estimates that the company's 2001 earnings will hit $16 million.

Telrad, another fully-owned subsidiary conservatively valued at $286 million, can expect a tough year 2001, Levey writes. Last year was a great one for the company: it reported operating profits of $60 million and revenues of $476 million. For this year, he expected revenues to dive toward $300 million. But from the perspective of the Koor investor, investments Telrad made in startups could create value in the long run.

Be Connected is considered the most promising in Telrad's stable of startups. Cisco invested a whopping $10 million in the company, which develops unified access systems to supply all telecoms services over next-generation networks.