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Operations and markets drive good H121

Ocean Wilsons Holdings 23 August 2021 Update
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Ocean Wilsons Holdings

Operations and markets drive good H121

2021 interims

Investment companies

23 August 2021

Price

1,050p

Market cap

£371m

$1.39/£, BRL5.2/US$

Net debt (US$m) 30 June 2021

432.7

Shares in issue

35.4m

Free float

36%

Code

OCN

Primary exchange

LSE

Secondary exchange

Bermuda

Share price performance

%

1m

3m

12m

Abs

3.5

11.2

56.4

Rel (local)

(0.3)

9.1

28.5

52-week high/low

1,135p

620p

Business description

Ocean Wilsons Holdings is an investment company based in Bermuda. It has a controlling shareholding in Wilson Sons, a quoted maritime services company in Brazil, and holds a portfolio of international investments.

Next events

WSON Novo Mercado Brazil listing

October 2021

Analysts

Pedro Fonseca

+44 (0)20 3077 5700

Andrew Mitchell

+44 (0)20 3681 2500

Ocean Wilsons Holdings is a research client of Edison Investment Research Limited

Ocean Wilsons (OCN) reported PBT of $66.2m in H121 versus a loss of $1.8m in H120. Buoyant financial markets have allowed OCN’s global investment portfolio (OWIL) to swing from a loss in H120 to a strong performance. At the same time, OCN’s EBITDA grew 13% y-o-y to $79.6m and its operating profit by 23% as Wilson Sons’ (WSON) results improved as expected from recovering business levels and firmer prices. We have made some adjustments to our forecasts on the back of the results. We have kept EPS unchanged in FY21 but earnings have been cut by 9% in FY22 due to higher cost of debt assumptions. Our forecasts are equivalent to ROEs of about 8% for FY21 and FY22. OCN shares are currently trading at a significant 39% discount to their look-through value, which consists of the OWIL portfolio and OCN’s 57% stake in listed WSON.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/19

406.1

95.6

169.3

70.0

8.6

4.8

12/20

352.8

74.6

109.5

70.0

13.3

4.8

12/21e

382.3

110.0

178.1

70.0

8.2

4.8

12/22e

417.1

117.4

181.2

70.0

8.1

4.8

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

WSON recovery continues

The good operating trends in Q121 continued into Q221 as the Brazilian economy recovers against the backdrop of improving trade flows. In general, the two largest and key WSON businesses, container terminals and towage (combined 85% of group EBITDA), continue to perform well as expected, reporting 17% and 13% yoy EBITDA growth for H121, respectively. In contrast, WSON’s oil and gas service businesses continue to feel the slowdown in the sector’s exploration activity.

OWIL up 9% year-to-date

The OWIL portfolio grew 9% in H121 on the back of buoyant financial markets. It contributed $30.9m in portfolio returns and investment income in H121. We now assume a $42m contribution for FY21 (implying a 3% return in H221) and that it halves in FY22 to $20.9m (assuming a 6% return on the portfolio, which is mostly equities and private assets with some market neutral funds). However, performance may be different and there are market downside risks from global price inflation.

Valuation: 39% NAV discount, 4.8% US$ dividend

OCN is still trading at a 39% discount to its look-through value, which comprises the market value of the stake in WSON and the last reported value for the investment portfolio held by OCN. Despite a good growth outlook, WSON is trading at large discounts to its peers on valuation multiples such as P/E (31% in FY21e, 30% in FY22e) and EV/EBITDA (22% and 24%, respectively). These discounts could narrow when it lists on the Novo Mercado on the Brazilian stock exchange (now expected in October).

H121: Recovery and markets lead to good results

The good operating trends already seen in WSON’s Q121 numbers carried over into Q221, with a positive impact on OCN’s H121 figures. OCN’s EBITDA (which is essentially WSON’s EBITDA with some relatively small holding company operating expenses) rose by 13% yoy to $79.6m in H121 and EBIT (also driven by WSON) rose 22.9% y-o-y.

The bull run in equity markets has helped OWIL deliver another six months of significant gains following a very good H220. OWIL contributed $29.5m in portfolio returns plus $1.3m in investment income. This compares with a $13.8m loss and $0.9m investment income in H120.

The recovery in BRL against the US dollar in H121 led to FX translation gains on the US dollar debt while in H120 there had been translation losses of $11.7m and this also distorts the comparison with a year ago.

These factors contributed to OCN’s PBT of $66.2m in H121 looking very different from the loss of $1.8m of a year ago.

Exhibit 1: OCN semester progression

$m

H119

H219

H120

H220

H221

y-o-y %

Revenue

199.2

206.9

174.2

178.6

188.9

8.4%

Cash costs

(130.9)

(127.4)

(104.0)

(113.1)

(109.3)

5.0%

EBITDA

68.4

79.5

70.2

65.5

79.6

13.4%

Depreciation and amortisation

(27)

(27)

(26)

(25)

(25)

Amortisation of right to use

(6.4)

(6.0)

(5.3)

(5.4)

(6.0)

Impairment charge (goodwill & intangibles)

0.0

(13.0)

0.0

0.4

0.0

Profit/loss on PPE

(0.1)

0.4

0.3

(0.6)

0.0

Operating profit

35.1

33.9

39.3

35.1

48.4

22.9%

Share of results of JVs

(0.6)

1.2

(5.2)

1.1

(0.7)

Investment portfolio returns

22.8

11.9

(13.8)

47.1

29.5

n.m.

Other investment income

2.2

3.8

0.9

0.7

1.3

41.6%

Finance costs

(12.8)

(14.9)

(11.4)

(11.8)

(14.6)

27.8%

Exchange gains/losses on monetary items

0.3

(0.4)

(11.7)

4.1

2.3

n.m.

Profit before tax

47.1

35.4

(1.8)

76.4

66.2

n.m.

Income tax

(13.1)

(8.4)

(16.6)

(10.0)

(14.4)

-13.0%

Profit before minorities

34.0

27.0

(18.4)

66.4

51.8

n.m.

Non-controlling interests

(5.9)

(8.3)

0.6

(9.9)

(12.3)

n.m.

Net attributable profit

28.1

18.7

(17.8)

56.5

39.5

n.m.

Source: Ocean Wilson Holdings

Container Terminals (39% of EBITDA in H121) benefited from higher container volumes in both of its ports. Total container volume handled rose by 11%, and full containers (which have a wider margin) rose by 9%. The divisional EBITDA rose by 17% also supported by the stronger BRL.

Towage (45% of EBITDA) results were also good, especially since the weaker US dollar negatively affects its margins. Harbour manoeuvres rose by 7% y-o-y in H121 and EBITDA rose by 13% as prices firmed up during the period.

The Offshore Support Vessels (WSUT) joint venture, which is the third largest EBITDA contributor (11%), continues to be affected by relatively low levels of activity in oil and gas exploration; the offshore platform services company is also affected. WSUT’s EBITDA fell 25% y-o-y in H121 affected by lower volumes, softer prices and the weaker US dollar (its prices are in US dollars). Our previous FY21 EBITDA forecast was for a 7% decline, so it is not a great surprise to see this weakness. While oil and gas prices are currently high, there is a lag before investment decisions are taken and actual oil and gas exploration starts. Management expects that palpable uplift in WSUT results will only start to be felt in late 2022 and in 2023.

Exhibit 2: WSON revenue analysis (H121)

Exhibit 3: WSON EBITDA analysis (H121)

Source: Wilson Sons. Note: Offshore vessels is pro forma share of JV, EBITDA adjusts for corporate centre.

Exhibit 2: WSON revenue analysis (H121)

Exhibit 3: WSON EBITDA analysis (H121)

Source: Wilson Sons. Note: Offshore vessels is pro forma share of JV, EBITDA adjusts for corporate centre.

Exhibit 4: OWIL portfolio returns and income ($m)

Exhibit 5: OWIL analysis of portfolio (H121)

Source: Ocean Wilsons Holdings

Source: Ocean Wilsons Holdings

Exhibit 4: OWIL portfolio returns and income ($m)

Source: Ocean Wilsons Holdings

Exhibit 5: OWIL analysis of portfolio (H121)

Source: Ocean Wilsons Holdings

Share restructuring ahead of schedule

With its Q221 results, WSON announced that the proposed share listing restructuring is moving ahead of schedule. Previously this had been expected to be concluded in November. Management now feels that it is on track to complete the move by October. WSON is changing from being a Bermuda-based company with Brazilian depository receipts (BDRs) listed in Brazil to being a company directed listed on the Novo Mercado segment in the Brazilian exchange. This will be achieved by a downstream merger of the Bermuda parent company with the 100% owned Brazilian one. There will be no shareholder dilution. A Novo Mercado listing will mean (1) greater share liquidity, (2) a stronger corporate governance seal and (3) an opportunity to join the main Brazilian and Latin American stock market indices.

Valuation

OCN shares are currently trading at a significant discount (39%) to its look-through valuation, which consists of its 57.09% stake in WSON and the OWIL global investment portfolio. The discount has widened from 35% when we last wrote in June 2021. OCN’s stake in WSON continues to account for almost all of its market value (currently 98%; it was 99% in June).

We continue to think a very cautious valuation is being applied to OCN. We believe that a 39% discount is unjustified even though we do accept that some investors have concerns due to Ocean Wilsons’ relatively small market capitalisation and the fact that three shareholders, Hansa Investment Company, Victualia and Chris Townsend, in total own 50.21% of the company, reducing liquidity. Positively, this ownership position enables both OWIL and WSON to maintain their long-term approaches to investment and operating the businesses.

Exhibit 6: Ocean Wilsons’ share price discount to look-through valuation

 

p

£m

Value contribution

Last OWIL value per Ocean Wilsons share (30 June 2021)

668.9

236.5

40%

Wilson Sons market value per Ocean Wilsons 57.09% share

992.3

350.9

60%

Ocean Wilsons look-through value

1,661.3

587.5

100%

Ocean Wilsons share price and market cap

1,010.0

357.2

Discount

-39%

-39%

Source: Refinitiv, Ocean Wilsons, Edison Investment Research. Note: US$1.39/£.

Exhibit 7 compares WSON with a selection of Brazilian and international port and shipping companies. The range of earnings and EV/EBITDA multiples is wide, and the businesses are differentiated in terms of activity and geographical exposure, but WSON trades at a significant discount to its peers even after outperforming them over the last 12 months. Its P/E ratios remain significantly lower than peers at 33% (FY21e) and 32% (FY22e) discounts. Its EV/EBITDA discounts to peers are 24% and 27%, respectively. Our forecast return on equity (ROE) for 2021 is 12.1%. This is only 13% below the forecasts for the peers (13.9%), but WSON trades on an FY21e P/BV of 2.0x, while its peers’ average is 50% higher at 3.0x.

WSON’s valuation ratios are noticeably lower than Santos Brasil, its closest peer, whose key asset is the container terminal in the Santos port in the state of São Paulo. This discount likely to narrow when WSON lists on the Novo Mercado on the Brazilian stock exchange.

Exhibit 7: WSON selected comparators

Company

Market cap (US$m)

P/E FY21e
(x)

P/E FY22e
(x)

EV/EBITDA FY21 (x)

EV/EBITDA FY22e (x)

Price book
FY21e (x)

ROE (%)
FY21e(x)

Wilson Sons

874

12.5

9.6

7.7

6.8

2.0

11.7

Santos Brasil (BRA)

1,251

39.1

19.7

11.6

8.1

3.8

8.0

China Merchants Ports (HKG)

5,371

7.9

7.5

12.2

12.7

0.5

5.9

Cosco (CHN)

2,600

8.4

7.7

10.4

9.0

0.4

6.2

Shanghai Int'l Port (CHN)

18,629

10.3

10.9

8.4

8.8

1.2

12.6

Hamburger Hafen (GER)

1,673

19.1

15.5

6.2

5.7

2.4

12.4

Intl Container Term Svcs (PHI)

7,474

23.9

20.4

10.7

9.8

9.8

38.5

Average

18.1

13.6

9.9

9.0

3.0

13.9

Wilson Sons vs average (%)

-31.0

-29.5

-22.3

-24.4

-33.9

-16.1

Source: Refinitiv, Edison Investment Research. Note: Prices as at 18 August 2021.

We include a table showing the recent share performance of the same group of comparators. This shows sharply differentiated performances between the companies, arguably reflecting their varied exposures. We note that WSON’s shares have strongly outperformed the average of the companies shown in the exhibit below over the last 12 months, including WSON’s most comparable Brazilian peer, Santos Brasil.

Exhibit 8: Wilson Sons’ and comparators’ performances (%)

Company

One month

Three months

One year

Ytd

From 12-month high

Wilson Sons

-5

21

77

63

-8

Santos Brasil (BRA)

-16

-10

43

-6

-24

China Merchants Ports (HKG)

-6

-13

22

-15

-16

Cosco (CHN)

-3

-9

37

-4

-18

Shanghai Int'l Port (CHN)

1

8

14

-10

-4

Hamburger Hafen (GER)

-7

-13

15

-23

-18

Intl Container Term Svcs (PHI)

13

33

69

45

-1

Average

-2

-1

25

-2

-10

Source: Refinitiv, Edison Investment Research. Note: Prices as at 18 August 2021.

Exhibit 9: WSON vs Bovespa year-to-date (£ terms)

Exhibit 10: WSON vs Bovespa and Bovespa year-to-date (£ terms)

Source: Refinitiv

Source: Refinitiv

Exhibit 9: WSON vs Bovespa year-to-date (£ terms)

Source: Refinitiv

Exhibit 10: WSON vs Bovespa and Bovespa year-to-date (£ terms)

Source: Refinitiv

Financials

OCN forecast changes

We have made some adjustments to our forecasts on the back of the H121 results.

OCN’s forecasts for FY21 have been positively affected by the assumption of a greater contribution from OWIL (this comes in below the EBITDA line) after such a good first half of FY21. This has been offset by some trimming of our WSON FY21 forecasts. All in all, we have increased our FY21 PBT estimates by 2.1%, while EPS is little changed at 178.1p. PBT and EPS for FY22 are 9.6% and 9.4% lower, mostly due to adjustments to our cost of debt assumptions.

Exhibit 11: OCN’s FY21 and FY22 forecasts changes

Revenue (£m)

Normalised PBT (£m)

Normalised EPS (p)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2021e

388.4

382.3

-1.6%

107.8

110.0

2.1%

178.2

178.1

-0.1%

2022e

409.4

417.1

1.9%

129.8

117.4

-9.6%

200.1

181.2

-9.4%

Source: Ocean Wilsons Holdings, Edison Investment Research

We calculate an ROE of 8.1% in FY21 and 7.7% in FY22 for OCN and estimate that PBT will increase by 48% from $74.6m in FY20 to $110m in FY21.

WSON forecast changes

On the WSON side, although the Q221 numbers did not have much in surprises we have trimmed out of caution our FY21 numbers, and mostly in in container terminals as July operating data shows some bottlenecks in global supply chains are appearing. The revenue has been reduced by 1.6% but increased by 1.9% in FY21 and FY22 forecasts (WSON’s revenue being basically the same as OCN’s). WSON FY21 EBITDA (IFRS basis) was reduced by 4%, while the FY22 raised by 1%.

We are now forecasting 8% revenue growth in FY21 and 9% in FY22 on IFRS basis. EBITDA is forecast to increase 18% and 14% in these two years. We forecast that WSON’s earnings will almost double in FY21 and then they will increase by over 20% in FY22 as profitability starts to normalise.

Exhibit 12: WSON’s segmental revenue analysis and estimates

US$m

2018

2019

2020

2021e

2022e

Divisional net revenues

Container Terminals

183.0

167.8

132.2

144.3

157.6

O&G Offshore Base Support

20.9

19.4

8.0

6.8

8.5

Towage

165.6

159.5

173.6

184.6

203.5

Shipyards

24.0

4.5

2.2

4.6

3.0

Shipping Agency

10.0

9.2

8.1

9.0

9.5

Logistics

56.9

45.7

28.7

33.0

35.0

Total revenue (IFRS)

460.5

406.1

352.8

386.9

422.1

Offshore vessels*

58.6

61.2

60.9

53.9

55.9

Total revenue (pro-forma)

519.1

467.3

413.7

436.3

473.0

y-o-y (%)

-8.8

-9.7

-11.7

6.6

8.4

Divisional EBITDA

Container Terminals

83.5

85.2

68.7

83.6

93.8

O&G Offshore Base Support

5.1

2.2*

-0.5

-0.2

0.9

Towage

79.4

75.8

85.8

93.7

103.8

Shipyards

2.7

-0.1

-2.7

0.4

0.2

Shipping Agency

1.2

1.5

2.3

2.8

2.9

Logistics

7.1

10.2

4.5

7.4

7.0

Corporate

-18.4

-20.6

-15.7

-19.3

-17.2

Total EBITDA (IFRS)

160.7

154.2

142.4

167.5

191.2

Offshore vessels*

27.1

30.0

31.2

22.7

24.6

Total EBITDA (pro-forma)

187.7

184.3

173.6

190.2

215.8

y-o-y (%)

-10.0

-1.8

-5.8

11.3

14.1

Divisional EBITDA margins (%)

Container Terminals

45.6

50.8

52.0

57.9

59.5

O&G Offshore Base Support

24.4

11.3

-6.3

-3.2

10.0

Towage

47.9

47.5

49.4

50.7

51.0

Shipyards

11.3

-1.7

-122.7

8.3

5.0

Shipping Agency

12.2

16.4

28.4

31.2

30.0

Logistics

12.5

22.4

15.7

22.5

20.0

Offshore vessels*

46.2

47.9

51.2

42.1

44.0

Total EBITDA margin (pro-forma)

36.2

39.3

42.0

43.6

45.6

Source: Edison Investment Research, WSON data. Note: Offshore vessels is WSON’s pro forma 50% share of the JV. *We add back the US$13m one-off asset write down in Offshore Base Support in 2019 for better comparison purposes.

OWIL income likely to come down in FY22

Our forecasts for OCN’s are also affected by OWIL and this brings additional volatility and earnings risks to our numbers. We are assuming that combined investment portfolio returns and investment income increase from $35m in FY20 to $41.9m in FY21 (it was $30.9m in H121 and the market has remained buoyant). We are then estimating that this income falls by about 50% to $22.9m. We continue to assume a 6% return on prior year end assets for OWIL in FY22. This compares with the 11.4% assumption for FY21. However, market performance may lead to significant divergence from our assumptions.

Our assumptions of lower returns for OWIL in FY22 versus FY21 lead us to forecast a 7% increase in PBT for OCN in FY22 to $117.4m, less than in WSON. Furthermore, we note that financial markets may be choppy in FY22, especially with the threat of high inflation in several countries and this may lead to an equities sell-off in 2022.

We estimate OCN’s pro-forma net debt to EBITDA ratio to be 3.2x in FY21 and this seems a reasonable level of debt, in our opinion. With the Salvador container expansion now completed and rising EBITDA, we expect this ratio to drop to 2.6x in FY22.

Exhibit 13: Financial summary

Year end 31 December

(US$m)

2019

2020

2021e

2022e

PROFIT & LOSS

Revenue

 

 

406.1

352.8

382.3

417.1

Cash costs

(258.3)

(217.1)

(224.7)

(235.5)

EBITDA

 

 

147.9

135.7

157.6

181.6

Depreciation and amortisation

(53.7)

(50.2)

(50.6)

(47.8)

Amortisation of right to use (IFRS 16)

(12.4)

(10.7)

(11.7)

(11.7)

Profit/loss on PPE

0.3

(0.3)

0.0

0.0

Share of results of JVs

0.6

(4.1)

0.2

2.5

Investment portfolio returns & interest revenue

40.8

35.0

41.9

22.9

Finance costs

(27.7)

(23.2)

(29.7)

(30.3)

Exchange gains/losses on monetary items

(0.1)

(7.6)

2.3

2.3

Extraordinary goodwill impairment charge

(13.0)

0.0

0.0

0.0

Profit Before Tax

82.5

74.6

110.0

117.4

Profit Before Tax (norm)

 

 

95.6

74.6

110.0

117.4

Income tax

(21.5)

(26.6)

(23.6)

(31.7)

Non-controlling interests

(14.2)

(9.3)

(23.4)

(21.6)

Profit After Tax (norm)

 

 

59.9

38.7

63.0

64.1

Average Number of Shares Outstanding (m)

35.4

35.4

35.4

35.4

EPS - normalised (c)

 

 

169.3

109.5

178.1

181.2

Dividend per share (c)

70.0

70.0

70.0

70.0

EBITDA Margin (%)

36.4

38.5

41.2

43.5

ROE (%)

6.0%

5.1%

8.1%

7.7%

BALANCE SHEET

Fixed Assets

 

 

1,007.5

887.3

926.1

934.1

Intangible Assets

225.4

179.7

216.3

204.6

Tangible Assets

755.6

681.4

680.9

698.0

Investments

26.5

26.2

29.0

31.5

Current Assets

 

 

460.6

492.8

505.9

533.7

Stocks

10.5

11.8

13.0

14.1

Debtors

82.3

70.3

90.3

94.0

Cash

69.0

63.3

55.0

64.0

Trading investments

298.8

347.5

347.6

361.5

Current Liabilities

 

 

115.7

124.3

119.0

127.9

Creditor

57.1

47.4

55.0

59.9

Short term borrowings & leasings

58.6

76.9

64.0

68.0

Long Term Liabilities

 

 

540.1

485.9

506.5

465.3

Creditors & leasings

470.6

423.7

450.0

407.9

Other long term liabilities

69.5

62.2

56.5

57.4

Net Assets

 

 

785.9

743.7

805.3

866.3

CASH FLOW

Operating Cash Flow

 

 

158.6

144.0

145.5

177.9

Net Interest

(29.0)

(10.3)

(27.2)

(15.3)

Tax

(23.3)

(22.4)

(23.0)

(31.7)

Capex

(85.7)

(62.0)

(55.6)

(45.0)

Acquisitions/disposals

0.0

0.0

0.0

0.0

Net acq/disposals of financial assets

20.4

(18.6)

41.6

41.6

Equity financing

0.0

0.0

0.0

0.0

Dividends

(42.2)

(42.2)

(56.2)

(56.2)

Other (including divs from JV,fx effects)

(1.3)

34.2

(41.6)

(55.6)

Net Cash Flow

(2.4)

22.8

(16.4)

41.8

Net debt/(cash) including leases

 

460.1

437.3

453.7

411.9

Source: Ocean Wilsons Holdings, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Ocean Wilsons Holdings and prepared and issued by Edison, in consideration of a fee payable by Ocean Wilsons Holdings. Edison Investment Research standard fees are £49,500 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 2021 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Ocean Wilsons Holdings and prepared and issued by Edison, in consideration of a fee payable by Ocean Wilsons Holdings. Edison Investment Research standard fees are £49,500 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 2021 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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