PVA TePla — Lower estimates after Q3 results

PVA TePla (FRA: TPE)

Last close As at 14/11/2024

EUR12.15

0.11 (0.91%)

Market capitalisation

EUR265m

More on this equity

Research: TMT

PVA TePla — Lower estimates after Q3 results

PVA TePla (PVA) reported a 2.3% y-o-y decrease in sales in Q324 and management has set guidance at the lower end of the range for both sales (€270–90m) and EBITDA (€47–51m). Metrology sales held up nicely in the quarter, while sales in the other activities in the semiconductor division showed a decrease. We have lowered our estimates modestly for both FY24 and FY25 given a more challenging expected market environment in wafer fabrication for the semiconductor industry. On our new estimates, PVA trades at an EV/EBITDA FY25e multiple of 3.7x, which we believe is very undemanding.

Edwin de Jong

Written by

Edwin De Jong

Analyst

TMT

PVA TePla

Lower estimates after Q3 results

Q324 results update

Technology

15 November 2024

Price

€12.15

Market cap

€264m

Net cash (€m) at end-Q324

1.6

Shares in issue

21.7m

Free float

86%

Code

TPE

Primary exchange

Deutsche Börse

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.2)

(15.9)

(35.4)

Rel (local)

(3.9)

(21.9)

(47.6)

52-week high/low

€23.58

€11.60

Business description

PVA TePla is a German equipment supplier, mostly for the semiconductor industry but also for the industrial market. Within the sector it is a technology leader in the synthesis (including crystal growing), joining and refining of materials, especially steel. Metrology (acoustic/chemical/optical), especially for the semiconductor sector, is gaining importance and this is a clear growth market.

Next events

Deutsche Eigenkapitalforum

25–27 November 2024

Analyst

Edwin de Jong

+44 (0)20 3077 5700

PVA TePla is a research client of Edison Investment Research Limited

PVA TePla (PVA) reported a 2.3% y-o-y decrease in sales in Q324 and management has set guidance at the lower end of the range for both sales (€270–90m) and EBITDA (€47–51m). Metrology sales held up nicely in the quarter, while sales in the other activities in the semiconductor division showed a decrease. We have lowered our estimates modestly for both FY24 and FY25 given a more challenging expected market environment in wafer fabrication for the semiconductor industry. On our new estimates, PVA trades at an EV/EBITDA FY25e multiple of 3.7x, which we believe is very undemanding.

Year
end

Revenue
(€m)

EBITDA*
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA
(x)

Yield
(%)

12/22

205.2

30.0

0.82

0

12.7

N/A

12/23

263.4

41.5

1.22

0

10.6

N/A

12/24e

270.3

46.7

1.36

0

5.0

N/A

12/25e

276.0

51.4

1.51

0

3.7

N/A

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Lower guidance after Q3 results

After year-on-year revenue increases in Q1 (+5%) and Q2 (+8.3%) this year, Q3 showed a decrease of 2.3%, to €63.0m. While sales in the industrial segment held up well, sales in the semiconductor segment decreased. This was driven by lower silicon carbide (SiC) crystal-growing equipment sales, partially offset by an increase in metrology equipment sales. EBIT margin decreased to 13.4% in Q324, from 15.4% in Q323 and 15.1% in Q224, mostly driven by higher R&D expenses. Order intake in Q324 (see Exhibit 2) was at a very low level at €34.7m. We expect that most of the order intake related to metrology tools. Order intake for SiC furnaces is very bulky and lumpy and this market is weak at the moment, while there is still a significant backlog. PVA has lowered its FY24 guidance of sales in the range of €270–290m and EBITDA of €47–51m to the lower end of these ranges. In order to reach the lower end of the guided range PVA needs revenues in Q424 of €72–82m (Q423: €72.2m) and EBITDA of €14.6–16.6m (Q423: €17.9m).

Metrology now >50% of semiconductor sales

In the Q3 results call, PVA indicated that metrology sales made up 34% of sales (€67.54m) in the first nine months. We assume that this portion will increase in Q4, which implies that over half of the revenues in the semiconductor segment are now generated by metrology. Management also maintained its confidence in its FY25 guidance of slight top-line growth.

Modest changes to estimates

We have lowered our top-line estimates for FY24 and FY25 by 5–10% and our EBITDA estimates by 3–4%. We now assume modest revenue growth in FY25e for the metrology activities, awaiting final qualification for some larger potential clients, and a continued downturn in the Si/SiC activities, while the plasma activities are expected to be stable. In Industrial Systems we expect growth of 7% in FY25.

Small changes to estimates

Following the Q3 results, we have made modest changes to our estimates in line with management’s new guidance. The strong development in metrology in FY24 also implies that sales of Si and SiC crystal-growing equipment have been weak. This is the most cyclical part of PVA’s activity portfolio and the outlook for this segment in FY25 is also not very strong, as previously built-up capacity is being absorbed. For instance, this is reflected in a >20% lower consensus FY25 sales estimate for PVA’s key client Siltronic compared to the start of the year. As a result, we have decreased our FY25 estimates modestly.

Exhibit 1: Changes to estimates

(€m)

FY23

FY24e old

FY24e new

Change

FY25e old

FY25e new

Change

Total revenue

263.4

284.2

270.3

-4.9%

305.9

276.0

-9.8%

EBITDA

41.5

47.9

46.7

-2.6%

53.2

51.4

-3.5%

EBIT

34.4

41.4

39.0

-5.8%

46.2

43.5

-5.9%

Pre-tax profit

34.1

40.8

38.4

-5.9%

45.6

42.9

-5.9%

Net income

24.5

29.3

27.6

-5.9%

32.8

30.8

-6.1%

EPS (€)

1.13

1.35

1.27

-5.7%

1.50

1.42

-5.9%

Source: PVA, Edison Investment Research

PVA’s order intake has decreased significantly in the last two years, especially in the semiconductor segment, driven by lower orders from wafer fabrication facilities as capacity build outs have decreased. It is expected that in FY25 and FY26 more wafer capacity will be absorbed (see SUMCO estimates) and this implies that order intake will probably increase again sometime in 2025. We expect that the significant €187m backlog consists, for a large part, of previous, long lead-time bulk orders for this segment of the market.

Order intake in the fast-growing metrology segment has much smaller lead times and is sometimes not even recorded in the order book as delivery can be made in the same quarter. The vast majority of order intake in the semiconductor sector this year related to metrology tools.

The large order book, together with strong growth in metrology and the stable industrial segment, gives us confidence that our FY25 estimates and management’s guidance are realistic.

Exhibit 2: Backlog and order intake

Source: PVA TePla

Exhibit 3: Financial summary

2019

2020

2021

2022

2023

2024e

2025e

2026e

Year end 31 December, €m

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

131.0

137.0

155.7

205.2

263.4

270.3

276.0

335.7

Cost of Sales

(93.3)

(93.9)

(109.0)

(146.2)

(185.9)

(188.7)

(191.0)

(229.9)

Gross Profit

37.7

43.2

46.8

59.1

77.5

81.6

85.0

105.7

EBITDA

16.2

22.7

23.0

30.0

41.5

46.7

51.4

60.9

Operating profit (before amort. and excepts.)

13.0

19.2

18.3

25.9

36.5

41.1

45.6

53.5

Amortisation of acquired intangibles

(0.7)

(0.7)

(0.8)

(0.8)

(2.2)

(2.2)

(2.2)

(2.2)

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

12.3

18.5

17.6

25.1

34.4

39.0

43.5

51.3

Net Interest

(0.5)

(0.7)

(0.6)

(1.3)

(0.3)

(0.6)

(0.6)

(0.6)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

12.5

18.5

17.8

24.6

36.3

40.5

45.0

52.9

Profit Before Tax (reported)

11.8

17.8

17.0

23.8

34.1

38.4

42.9

50.7

Reported tax

(4.1)

(5.1)

(5.6)

(6.1)

(9.7)

(10.9)

(12.2)

(14.4)

Profit After Tax (norm)

8.4

13.4

12.2

18.5

26.6

29.6

32.9

38.5

Profit After Tax (reported)

7.7

12.7

11.4

17.7

24.4

27.5

30.7

36.3

Minority interests

(0.1)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

8.3

13.4

12.2

18.5

26.6

29.6

32.9

38.5

Net income (reported)

7.7

12.8

11.5

17.8

24.5

27.6

30.8

36.4

Basic average number of shares outstanding (m)

21.7

21.7

21.7

21.7

21.7

21.7

21.7

21.7

Average number of shares outstanding diluted (m)

21.7

21.7

21.7

21.7

21.7

21.7

21.7

21.7

EPS (€)

0.36

0.59

0.53

0.82

1.12

1.27

1.42

1.68

EPS - normalised (€)

0.38

0.61

0.56

0.85

1.22

1.36

1.51

1.77

DPS (€)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

28.8

31.5

30.0

28.8

29.4

30.2

30.8

31.5

EBITDA Margin (%)

12.4

16.6

14.8

14.6

15.8

17.3

18.6

18.1

Normalised Operating Margin (%)

9.9

14.0

11.8

12.6

13.9

15.2

16.5

15.9

BALANCE SHEET

Fixed Assets

52.0

47.3

71.7

72.8

82.2

84.5

85.6

84.1

Intangible Assets

11.5

11.1

10.4

20.5

18.6

18.6

18.6

18.6

Tangible Assets

30.2

28.6

28.8

34.0

41.6

43.9

45.1

43.5

Investments & other

10.3

7.6

32.5

18.3

21.9

21.9

21.9

21.9

Current Assets

128.9

129.8

168.4

217.5

223.2

248.3

291.6

377.4

Stocks

65.2

67.6

59.2

75.0

94.6

97.1

99.1

120.5

Debtors

27.4

24.8

32.6

73.6

57.0

58.5

55.2

62.1

Cash & cash equivalents

25.5

29.6

57.6

27.1

20.1

41.3

85.9

143.4

Other

10.8

7.8

19.1

41.8

51.4

51.4

51.4

51.4

Current Liabilities

96.1

79.3

126.3

147.6

130.2

130.2

143.9

191.8

Creditors

10.8

8.0

11.1

18.3

18.8

19.3

19.7

24.0

Tax and social security

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

85.3

71.3

115.2

129.3

111.4

110.8

124.2

167.8

Long Term Liabilities

27.6

28.6

31.1

38.7

47.7

47.7

47.7

47.7

Long term borrowings

3.3

1.7

1.2

5.1

14.5

14.5

14.5

14.5

Other long-term liabilities

24.2

26.9

29.9

33.6

33.3

33.3

33.3

33.3

Net Assets

57.2

69.2

82.7

104.1

127.4

154.9

185.6

221.9

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

57.2

69.2

82.7

104.1

127.4

154.9

185.6

221.9

CASH FLOW

Operating Cash Flow

22.4

21.6

22.4

44.2

32.1

35.2

38.6

45.9

Working capital

(23.0)

(13.6)

36.4

(58.3)

(30.1)

(4.0)

15.0

19.6

Net operating cash flow

(0.6)

8.1

58.9

(14.1)

2.0

31.1

53.6

65.5

Capex

(12.5)

0.6

(34.0)

(21.3)

(10.8)

(10.0)

(9.0)

(8.0)

Acquisitions/disposals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net interest

(1.0)

1.6

0.5

(3.9)

(9.4)

0.0

0.0

0.0

Equity financing

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(1.4)

(4.3)

3.5

5.3

1.8

0.0

0.0

0.0

Net Cash Flow

(15.5)

6.0

28.8

(33.9)

(16.4)

21.1

44.6

57.5

Opening net debt/(cash)

(37.6)

(22.1)

(27.9)

(56.4)

(22.1)

(5.7)

(26.8)

(71.4)

FX

0.1

0.2

0.4

0.5

(0.1)

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

(22.1)

(27.9)

(56.4)

(22.1)

(5.7)

(26.8)

(71.4)

(128.9)

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by PVA TePla and prepared and issued by Edison, in consideration of a fee payable by PVA TePla. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by PVA TePla and prepared and issued by Edison, in consideration of a fee payable by PVA TePla. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Financials

Metro Bank — Profitability achieved and targets reiterated

Metro Bank (Metro) has published a trading update that shows that it returned to profitability in October. This is consistent with previous guidance of a return to profitability during Q424 and the bank has reiterated its guidance for a mid- to upper single-digit FY25 return on tangible equity (RoTE). The October net interest margin of 2.48% also points to faster improvement than we had anticipated. Separately, the bank reported that it has resolved Financial Conduct Authority (FCA) enquiries into legacy transactions monitoring systems and control. The £16.7m financial penalty is non-recurring and equivalent to c 2.5p of tangible book value per share. At this stage, we have not adjusted the forecasts set out in our recent initiation note and will review these with the full year results.

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