PVA TePla — Strong Q224 results

PVA TePla (FRA: TPE)

Last close As at 23/08/2024

EUR14.28

−0.04 (−0.28%)

Market capitalisation

EUR311m

More on this equity

Research: TMT

PVA TePla — Strong Q224 results

PVA TePla’s (PVA’s) Q224 results were strong and management reiterated its FY24 guidance and FY25 outlook of moderate growth, despite a weak order intake. The outlook is based on the expectation of increased order momentum in Q4, especially for metrology. PVA has resolved the issue of replacing at short notice two supervisory board members. Two new board members will be up for election at PVA’s AGM on 30 August. Although the company’s share price has appreciated from its recent lows of c €13 (from c €20 earlier this year), there is no meaningful recovery yet. With FY24 and FY25 estimates unchanged, this implies much lower multiples compared to our initiation report in May.

Edwin de Jong

Written by

Edwin De Jong

Analyst

TMT

PVA TePla

Strong Q224 results

Q2 results update

Technology

22 August 2024

Price

€14.61

Market cap

€318m

Net debt at end-H124

€3.1m

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

3.5

(25.1)

(17.2)

Rel (local)

1.9

(24.0)

(30.0)

52-week high/low

€23.6

€12.8

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

AGM

30 August 2024

Q3 results

12 November 2024

Analyst

Edwin de Jong

+44 (0)20 3077 5700

PVA TePla is a research client of Edison Investment Research Limited

PVA TePla’s (PVA’s) Q224 results were strong and management reiterated its FY24 guidance and FY25 outlook of moderate growth, despite a weak order intake. The outlook is based on the expectation of increased order momentum in Q4, especially for metrology. PVA has resolved the issue of replacing at short notice two supervisory board members. Two new board members will be up for election at PVA’s AGM on 30 August. Although the company’s share price has appreciated from its recent lows of c €13 (from c €20 earlier this year), there is no meaningful recovery yet. With FY24 and FY25 estimates unchanged, this implies much lower multiples compared to our initiation report in May.

Year
end

Revenue
(€m)

EBITDA*
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA
(x)

Yield
(%)

12/22

205.2

30.0

0.82

0.00

12.7

N/A

12/23

263.4

41.5

1.22

0.00

10.6

N/A

12/24e

284.2

47.9

1.44

0.00

6.2

N/A

12/25e

305.9

53.2

1.60

0.00

4.7

N/A

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

Robust Q2 results

After the Q124 results, which were released at PVA’s capital markets day, the company’s Q2 results were, again, strong. Revenues increased 8.3% in Q2 to €73.9m and this was especially driven by the industrial division. Due to mix, with a larger proportion of higher-margin metrology systems and lower material and production costs, PVA increased EBIT 31.4% to €11.2m. The company reiterated its FY24 guidance of sales in the range of €270–290m and EBITDA of €47–51m. In the conference call after the results, management expressed confidence regarding its FY25 guidance of moderate growth, due to ongoing talks with clients and PVA’s order pipeline, easing investor worries about the weak order intake (excluding metrology).

Supervisory board situation seems resolved

Proxy advisors did not support the former election proposal for a two-year term extension for long-serving existing supervisory board members, which had been proposed to ensure an optimal transition. PVA did not want to take a risk with the voting and decided to postpone the AGM until 30 August. The company has now found two new well-qualified board members who will be put forward in the AGM.

Valuation: Transformation not valued versus peers

The discount at which PVA trades, compared to its peer groups in advanced material, metrology and semiconductor equipment, has increased significantly compared to our May report. We believe this was caused by the supervisory board situation, low order intake and its deletion from the MSCI World Small Cap Index. PVA’s strong results and outlook seem to be overlooked. At an FY25e EV/EBITDA of 4.7x, the company’s valuation is undemanding compared all three reference groups. Our discounted cash flow (DCF) model arrives at a value of €35.26 per share.

Uptick in industrial division revenues in Q2

After PVA’s Q124 results, released at the company’s capital markets day, PVA’s Q2 results were strong. In the industrial segment there was a healthy uptick in revenues with 18.1% y-o-y and 47.6% q-o-q growth, driven by the demand for joining and finishing technologies. The growth in semiconductor sales was much lower with 4.1% y-o-y and 10.4% q-o-q. This growth was driven by both crystal growing and metrology tools. Overall revenues increased 8.3% in Q2 to €73.9m and 6.8% to €135.3m for H124.

Exhibit 1: Profit & loss statement (€m)

Q123

Q223

Q323

Q423

Q124

Q224

y-o-y growth

q-o-q growth

Revenues Industrial systems

16.5

20.5

20.4

20.0

16.4

24.2

18.1%

47.6%

Revenues Semiconductor systems

42.0

47.7

44.1

52.3

45.0

49.7

4.1%

10.4%

Total revenues

58.5

68.2

64.5

72.3

61.4

73.9

8.3%

Total revenue growth y-o-y

-21.3%

16.7%

-5.5%

12.1%

-15.1%

20.3%

Total revenue growth q-o-q

-29.1%

24.1%

-0.6%

-1.8%

-18.0%

47.6%

EBIT Industrial systems

1.0

3.0

3.5

2.8

1.9

2.3

-23.3%

21.1%

EBIT Semiconductor systems

6.0

6.9

8.7

9.3

6.1

10.0

44.9%

63.9%

Operating profit (including corporate)

5.5

8.5

9.9

10.5

7.0

11.2

31.4%

59.6%

EBIT margin

9.4%

12.5%

15.4%

14.5%

11.4%

15.1%

EBT

5.4

8.5

9.8

10.4

6.7

10.4

22.1%

54.7%

Net profit

3.8

5.5

7.4

7.8

4.5

7.5

35.6%

66.5%

EPS (€)

0.17

0.25

0.34

0.36

0.21

0.35

35.6%

66.5%

Source: PVA, Edison Investment Research

Due to mix, with a larger proportion of sold higher-margin metrology systems and lower material and production costs, PVA increased EBIT 31.4% y-o-y to €11.2m in Q224. EBIT margin amounted to 15.1%, compared to 12.5% in Q223, and it is already at the target level. Net profit amounted to €7.5m (€5.5m in Q223).

Exhibit 2: EBIT of divisions

Source: PVA

Management confirmed guidance for FY24 of achieving group sales of €270–290m and EBITDA of €47–51m. In FY25, management expects moderate growth, anticipating an acceleration of sales in FY26 and beyond. We expect this to be mostly driven by metrology systems. The medium-term sales target of €500m in 2028 was also reiterated. As a result, we have made no changes to our estimates following PVA’s Q224 results.

Order intake weak despite strong metrology division

The order book amounted to €214.4m, compared to €258.4m in Q1 and €298.3m in Q223. Order intake was €30.2m (Q1: €42.3m) and was the key focus in the conference call after the results. PVA expects order momentum in the semiconductor industry to pick up in Q4 of this year, based on leads and talks with its client base. As PVA TePla only records order book wins when a prepayment is received, we have confidence in its assessment of the order book and revenue outlook for FY24.

In the presentation of the results, PVA gave more details on the order intake for H1 (see Exhibit 3). Of the €50.5m order intake for semiconductors, roughly €41.3m should be classed as metrology, as the vast majority of metrology tools are used in semiconductors. As margins for metrology are much higher than the company average, this bodes well for PVA’s margins going forward.

Exhibit 3: Order intake

Source: PVA

Overall, this makes us confident that PVA can reach its targeted full-year margins of 15% in FY24. Instrumental for this margin target is the potential of the ultrasound metrology tools (see Exhibit 4), which are used in advanced packaging for semiconductors among other applications. This is one of the hottest areas in semiconductor manufacturing as, although Moore’s law (the number of transistors on a given area doubles every 18 months) is slowing down, the back end, packaging of chips and 3D packaging solutions are becoming crucial for technological progress. 3D packaging solutions is the market PVA addresses the most. In the conference call after the Q2 results, management reaffirmed it has the three top players in this segment as clients for PVA’s automated tools, which are used in production environments. Nevertheless, the company’s market share in automated tools has ample room to grow.


Exhibit 4: Selected markets outlook

Source: PVA

Supervisory board situation seems resolved

At the beginning of 2024, PVA’s supervisory board initiated the process of replacing itself with the help of external advisory consultants. Board members Alexander von Witzleben and Prof Dr Gernot Hebestreit have been with the company for more than 12 years and, therefore, do not comply with the German governance code. We expect that the supervisory board acted slowly in replacing itself to help PVA during its period of transition after acting CEO Manfred Bender and board member Dr Andreas Muhe left the company in June 2023.

PVA had previously set an election proposal for a two-year term extension for its existing board members. However, it became apparent that the proxy advisors would not support this proposal. PVA did not want to take a risk with voting and decided to postpone the AGM until 30 August.

At the AGM, Christoph von Seidel and Dieter May will be introduced as new candidates for the supervisory board. Alexander von Witzleben and Prof Dr Markus H Thoma will step down, while Prof Dr Gernot Hebestreit will run for a maximum of one additional year to ensure a smooth transition and optimal knowledge transfer, especially for the audit committee. There appear to be no indications that there are problems with the proposed new supervisory board members, who have tech (Dieter May, from Nanoco) and financial (Christoph von Seidel, from EY) backgrounds.

Valuation undemanding

Given PVA’s specific profile, with activities in the different fields of metrology and materials technologies, it does not have a comparable peer that carries out both activities. However, looking at PVA’s activity profile, we have separated its activities into three areas and compared the company’s valuation with those groups: advanced material peers, metrology peers and European semiconductor peers. We have also included a DCF valuation.


DCF

Our DCF model is based on the following assumptions:

We only consider organic revenue growth, although we expect PVA to remain active in M&A. We expect organic growth to decrease in 2024 and 2025 to around 8%, accelerate in the next few years to 13% and then moderate around 10% in 2030. We have used a terminal growth rate of 2.0%, reflecting the structural growth of the company.

We assume the EBITA margin will increase to 18%, from 14.9% in FY23, as PVA benefits from operational leverage and increasing exposure to higher-margin businesses related to semiconductors.

We assume the effective tax rate gradually moves up to 30%, based on the corporate tax rate in Germany.

We use a beta of 1.5 to reflect the cyclical characteristics of PVA’s end-markets, partly offset by the consistent growth characteristics of the sector.

We set a risk-free rate of 3.5% and an equity risk premium of 4.6%, delivering a weighted average cost of capital of 9.0%. The target capital structure we have used is 80% equity and 20% debt.

Our DCF model suggests a fair value for PVA of €35.26 per share.

Peer valuation

Because of its diversified profile, it is difficult to put PVA in a particular group of comparable companies. We have differentiated between three groups of companies that we believe share an important part of their activities with PVA TePla:

Advanced materials companies with an angle towards the semiconductor industry. These include US companies such as Coherent (formerly II-VI), Entegris and MKS Instruments, as well as French company Mersen.

Inspection and metrology peers, such as US-based KLA, Onto Innovation and Camtek, and European companies Comet and INFICON.

European semiconductor equipment suppliers, which includes Dutch company Besi, German-based company SÜSS MicroTec and Swiss company VAT Group.

When comparing the multiples of these groups to PVA’s multiples, the company’s multiples are not demanding (Exhibit 5) and the discount compared to our May initiation report has increased. We believe this is mostly due to the corporate governance issue and PVA’s deletion from the MSCI World Small Cap Index. The reaction to the company’s Q224 results has been positive.

At our DCF fair value of €35.26, PVA would trade at an FY24e EV/EBITDA multiple of 15.5x, which is still undemanding compared to two of the three reference groups.

Exhibit 5: Peer valuation

Market cap (€m)

EV/EBITDA
FY23 (x)

EV/EBITDA
FY24e (x)

EV/EBITDA
FY25e (x)

Advanced materials companies

Coherent

8,340

8.5

14.0

10.6

Entegris

19,604

23.5

21.6

17.6

MKS Instruments

8,273

12.5

12.8

10.9

Mersen

906

5.3

5.4

4.9

Average

12.5

13.5

11.0

Semiconductor inspection/process control companies

Camtek

3,808

34.9

34.7

29.4

Comet

2,332

46.0

37.6

19.0

Inficon

3,536

23.6

21.5

18.9

Onto Innovation

10,143

36.1

37.1

28.2

KLA

96,557

14.7

22.2

19..7

Nordson

16.7

16.8

18.0

16.5

Average

28.7

28.5

22.4

European semiconductor equipment companies

Besi

9,735

43.6

36.6

21.4

Suss MicroTec

941

15.3

14.2

11.7

VAT

13,800

46.6

40.9

29.1

Average

35.2

30.6

20.7

PVA TePla

321.7

10.6

6.2

4.7

Premium/discount vs materials peers

-15.2%

-54.1%

-57.4%

Premium/discount vs inspection/process control peers

-63.2%

-78.4%

-79.1%

Premium/discount vs European equipment peers

-70.0%

-79.8%

-77.4%

Source: Edison Investment Research, LSEG Data & Analytics. Note: Priced at 16 August 2024.

Exhibit 6: 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

284.2

305.9

346.3

Cost of Sales

(93.3)

(93.9)

(109.0)

(146.2)

(185.9)

(198.4)

(211.7)

(237.2)

Gross Profit

37.7

43.2

46.8

59.1

77.5

85.8

94.2

109.1

EBITDA

16.2

22.7

23.0

30.0

41.5

47.9

53.2

62.5

Operating profit (before amort. and excepts.)

13.0

19.2

18.3

25.9

36.5

43.5

48.4

56.7

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

41.4

46.2

54.6

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

42.9

47.8

56.1

Profit Before Tax (reported)

11.8

17.8

17.0

23.8

34.1

40.8

45.6

54.0

Reported tax

(4.1)

(5.1)

(5.6)

(6.1)

(9.7)

(11.6)

(13.0)

(15.3)

Profit After Tax (norm)

8.4

13.4

12.2

18.5

26.6

31.4

34.8

40.8

Profit After Tax (reported)

7.7

12.7

11.4

17.7

24.4

29.2

32.7

38.6

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

31.4

34.8

40.8

Net income (reported)

7.7

12.8

11.5

17.8

24.5

29.3

32.8

38.7

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

1.13

1.35

1.51

1.78

EPS - normalised (€)

0.38

0.61

0.56

0.85

1.22

1.44

1.60

1.88

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

16.9

17.4

18.1

Normalised Operating Margin (%)

9.9

14.0

11.8

12.6

13.9

15.3

15.8

16.4

BALANCE SHEET

Fixed Assets

52.0

47.3

71.7

72.8

82.2

85.6

87.6

87.6

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

45.1

47.1

47.1

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

255.5

308.9

385.9

Stocks

65.2

67.6

59.2

75.0

94.6

102.0

109.8

124.3

Debtors

27.4

24.8

32.6

73.6

57.0

61.5

61.2

64.1

Cash & cash equivalents

25.5

29.6

57.6

27.1

20.1

40.5

86.4

146.0

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

136.8

159.5

197.9

Creditors

10.8

8.0

11.1

18.3

18.8

20.3

21.9

24.7

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

116.5

137.6

173.1

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

156.6

189.3

227.9

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

156.6

189.3

227.9

CASH FLOW

Operating Cash Flow

22.4

21.6

22.4

44.2

32.1

35.7

39.7

46.6

Working capital

(23.0)

(13.6)

36.4

(58.3)

(30.1)

(5.3)

15.2

21.0

Net operating cash flow

(0.6)

8.1

58.9

(14.1)

2.0

30.4

54.9

67.6

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)

20.4

45.9

59.6

Opening net debt/(cash)

(37.6)

(22.1)

(27.9)

(56.4)

(22.1)

(5.7)

(26.1)

(72.0)

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)

(26.1)

(72.0)

(131.6)

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.

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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.

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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.

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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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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