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Veolia Environnement S.A. 03 July 2008

Company News Alert

Significant decline in common stock price since our last update report

Common BUY Veolia Environnement S.A.’s (Veolia) common stock price has declined significantly since our last
Direct
update access
report to general
reflecting the full reportin free
weakness global of charge
equity marketsatand investor concerns over the
Stock http://www.iirgroup.com/researchoracle/viewreport/show/20179
company’s profit warning that was announced on 19 June 2008. However, as we maintain our
Ticker: VIE.PA fundamental outlook for the company, we reiterate our BUY rating the common stock until we revalue
the company following the announcement of its 1H 08 results.
Target price: €59.35
Current price: €34.65
We will reassess our common stock rating for Veolia after the company announces its 1H 08 results
Price change
(20.3%) on 07 August 2008.
since last report:

ADR BUY We expect to revert to a 6-24 month investment horizon in order to value the company in our next full
update report, as we no longer anticipate a significant currency impact in the medium term1. Given
current price levels, we reiterate our BUY rating for the ADR.
Ticker: VE
Target price: US$100.18
Current price: US$54.61 We will reassess the ADR rating for Veolia after the company announces its 1H 08 results.
Price change
(22.3%)
since last report:

Supervisor: Nirav Shah

Analyst: Kavita Jogani Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months.
Editor: Matthew Bridle
If this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Global Research Director: charge) the short term trading outlook that we publish from time to time for this issuer, looking at the
Satish Betadpur, CFA coming 5-30 days for readers with a shorter trading horizon. These are available on-line only at
www.researchoracle.com.
Next news due:
1H 08 results, 07 August 2008
We reiterated the Veolia common stock a BUY in our previous update report, dated 17 April 2008 with
a target price of €59.35. The common stock price has since declined 20.3% to close at €34.65 on 02
July 2008, which we believe is largely due to weakness experienced in global equity markets. The CAC
40 index has fallen 11.5% over the same period to trade at 4,296.48 on 02 July 2008 reaching a 52
week low. Moreover, on 19 June 2008, the company announced its uncertainty in achieving its profit
targets given rising oil prices and fluctuations in currencies.

However, we continue to believe that the company remains fundamentally strong and that the recent
decline in the common stock price primarily reflects temporary negative market sentiment. We expect
that the company will continue to benefit from a number of acquisitions and contracts renewals in FY
2007. Although we may revise our estimates slightly downwards after the company announces its
results on 07 August 2008, given current price levels, we maintain our BUY rating for the common
stock.

Footnote
1We now expect the US dollar to appreciate significantly against the Euro over the next 6-24 months and USD/Euro is expected to range
between 1.56 – 1.35 over the period. We are therefore likely to take a 6-24 month investment horizon for this stock to capture the
anticipated long term.

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