Hellenic Petroleum — Overcoming unprecedented uncertainties

HELLENiQ ENERGY (ASE: ELPE)

Last close As at 23/04/2024

EUR8.27

0.07 (0.85%)

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Research: Energy & Resources

Hellenic Petroleum — Overcoming unprecedented uncertainties

Hellenic Petroleum experienced a weaker Q220 due to record-low benchmark margins. As a consequence of the unprecedented impacts of COVID-19, demand for global crude oil and oil products collapsed. As lockdown measures were imposed across Europe, lower economic activity severely affected travel and tourism markets in countries like Greece. Despite the current headwinds the industry is facing, Hellenic maintained a strong operating performance and was capable of minimising the impacts of COVID-19. This was possible due to its storage capacity and the flexibility of its refining system. We have updated our estimates and valuation to reflect Q220 results and the impact of COVID-19. Our updated valuation is down 3% to €6.81/share.

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Written by

Energy & Resources

Hellenic Petroleum

Overcoming unprecedented uncertainties

Operating update

Oil & gas

22 September 2020

Price

€5.20

Market cap

€1,589m

US$1.10/€

Net debt (€m) at 30 June 2020

1,753

Shares in issue

305.6m

Free float

19%

Code

ELPE

Primary exchange

ASE

Secondary exchange

LSE

Share price performance

%

1m

3m

12m

Abs

(6.1)

(20.5)

(43.1)

Rel (local)

(5.6)

(15.7)

(20.9)

52-week high/low

€8.80

€4.56

Business description

Hellenic Petroleum operates three refineries in Greece with a total capacity of 344kbod and has sizeable marketing (domestic and international) and petrochemicals divisions.

Next events

Kozani 204MW portfolio acquisition close

Q320

Analysts

Carlos Gomes

+44 (0)20 3077 5700

Elaine Reynolds

+44 (0)20 3077 5713

Hellenic Petroleum is a research client of Edison Investment Research Limited

Hellenic Petroleum experienced a weaker Q220 due to record-low benchmark margins. As a consequence of the unprecedented impacts of COVID-19, demand for global crude oil and oil products collapsed. As lockdown measures were imposed across Europe, lower economic activity severely affected travel and tourism markets in countries like Greece. Despite the current headwinds the industry is facing, Hellenic maintained a strong operating performance and was capable of minimising the impacts of COVID-19. This was possible due to its storage capacity and the flexibility of its refining system. We have updated our estimates and valuation to reflect Q220 results and the impact of COVID-19. Our updated valuation is down 3% to €6.81/share.

Year-end

Revenue
(€m)

Adjusted
EBITDA* (€m)

Net debt
(€m)

P/E
(x)

Dividend yield
(%)

12/18

9,769

730

1,460

8.0

14.4**

12/19

8,857

570

1,544

9.5

9.6

12/20e

6,554

379

1,757

20.6

9.6

12/21e

6,556

604

1,790

7.7

9.6

Note: *Adjusted numbers account for inventory movements and other one-off items. **Includes special dividend from DESFA proceeds.

Overcoming record-low refining margins

2020 is proving to be a challenging year for the oil and gas industry. Demand for global crude oil and oil products collapsed and refining margins reached historical low values. The outlook for Q320 remains weak as uncertainty persists and new spikes of COVID-19 cases are observed across the world. However, Hellenic has proved capable of navigating through tough periods in the past and, via efficient storage management and trading around the forward curve, has largely been able to offset the negative effects of COVID-19 on its performance.

Aspropyrgos turnaround underway

Full turnaround of the Aspropyrgos refinery is now underway, which is a key priority for Hellenic in 2020. This will be the biggest shutdown and maintenance project that Hellenic has undertaken in a single turnaround of refinery, with more than €130m of maintenance and capital expenditure invested. At the same time, it expects the Kozani 204MW photovoltaic project transaction to be closed in September, and is targeting commercial operations starting in Q122. The technical solution has been finalised and funding discussions are at an advanced stage.

Valuation: Blended valuation at €6.81/share

Our valuation is based on a blend of DCF, EV/EBITDA and P/E approaches. Hellenic is currently trading at a premium to European peers on 5.9x FY21e EV/EBITDA, versus the sector average of 4.2x, and 7.7x FY21e P/E compared to the European sector average of 5.9x. Our blended valuation falls 3% to €6.81/share (previously €7.00/share), reflecting the expected lower demand for oil products in the next three to six months and lower realised margins.

Good operational performance despite COVID-19

During 2019, the fundamentals of the Greek economy improved. However, the COVID-19 pandemic disrupted global financial stability and reversed the prospects for Greek economic growth, with GDP declining 1.6% in Q120 versus the last quarter of 2019 and 0.9% versus Q119, reflecting the beginning of the confinement measures imposed in March. With the country particularly affected by lockdowns, travel and tourism restrictions, the collapse in demand led to record-low benchmark refining margins. Total demand for motor fuels decreased by 14.5% in H120, and aviation and bunkers demand decreased by 58% in Q220 compared to the same quarter in 2019.

Exhibit 1: Domestic market fuel demand (MT 000s)

Exhibit 2: Aviation and bunkers fuel demand (MT 000s)

Source: Hellenic Petroleum, Edison Investment Research

Source: Hellenic Petroleum, Edison Investment Research

Exhibit 1: Domestic market fuel demand (MT 000s)

Source: Hellenic Petroleum, Edison Investment Research

Exhibit 2: Aviation and bunkers fuel demand (MT 000s)

Source: Hellenic Petroleum, Edison Investment Research

Despite these challenges, Hellenic was able to maintain operations uninterrupted and positive operating cash flow. It was able to manage the low demand with efficient storage management and by trading around the forward curve. This was possible due to Hellenic’s storage capacity and the flexibility of its refining system. Against this challenging backdrop, Q220 results were still positive with adjusted EBITDA standing at €63m, c 50% lower than the same period in 2019. Inventory gains of €26m were reported in the quarter, as crude oil prices recovered, offsetting part of the loss from the previous quarter. The company reported net debt of €1.8bn, slightly lower than in Q120.

Exhibit 3: Benchmark margins ($/bbl) – FCC

Exhibit 4: Benchmark margins ($/bbl) – hydrocracking

Source: Hellenic Petroleum, Edison Investment Research

Source: Hellenic Petroleum, Edison investment Research

Exhibit 3: Benchmark margins ($/bbl) – FCC

Source: Hellenic Petroleum, Edison Investment Research

Exhibit 4: Benchmark margins ($/bbl) – hydrocracking

Source: Hellenic Petroleum, Edison investment Research

The outlook for refiners remains weak in the coming quarters as uncertainty persists and new spikes in COVID-19 cases are observed across the world. A key priority for Hellenic will be full turnaround of the Aspropyrgos refinery. This will be the biggest shutdown and maintenance project that Hellenic has undertaken in a single turnaround of a refinery, with more than €130m of maintenance and capital expenditure invested so far in H220, including €60m of upgrades and environmental projects. Hellenic expects a lower output of 800kt in Q320 and Q420 as a consequence of the turnaround in a period when gross production typically amounts to c 4,000kt.

Hellenic has reiterated that renewables are a key pillar of its strategy for improving its carbon footprint. Management believes that renewables will allow the company to reduce earnings volatility, lower market risk and diversify from its core refining business. Some COVID-19 related delays are expected in the development of the Kozani 204MW photovoltaic project. However, management expects the transaction to be closed in September 2020, and is targeting commercial operations to start in Q122. The technical solution has been finalised and the company’s funding discussions are at an advanced stage.

Financials and changes to estimates

Key changes to our financial estimates and market expectations include weaker global demand for oil products during the year caused by the COVID-19 pandemic. As a consequence, we have lowered our refining margin estimates for Q320 to reflect low benchmark margins in May to August 2020: Aspropyrgos benchmark margins averaged -$0.3/bbl in the July to August period compared to $3.8/bbl in Q120 and $0.5/bbl in Q220; Thessaloniki averaged -$1.9/bbl in July to August versus $0.0/bbl in Q120 and Q220; and Elefsina averaged -$0.5/bbl in July-August vs $5.2bbl in Q120 and $0.2/bbl in Q220). We expect margins to remain under pressure for at least the next three to six months, with subsequent improvements as the global economy recovers from the coronavirus and oil prices potentially remain at relatively subdued levels. All in all, our FY20e total EBITDA is 22% lower vs our previous estimate to account for ongoing weakness in the benchmark margins and the record-low margins achieved in Q220. Our FY21e total EBITDA remains broadly unchanged.

Exhibit 5: Changes to Edison forecasts

€m

Actual

Edison new

Edison old

Difference (%)

 

FY19

FY20e

FY21e

FY20e

FY21e

FY20e

FY21e

Adjusted EBITDA, refining

346

245

387

299

398

-18%

-3%

Adjusted EBITDA, petrochemicals

93

66

90

69

80

-4%

12%

Adjusted EBITDA, marketing

138

78

135

128

138

-39%

-2%

Other

(14)

(10)

(8)

(10)

(8)

0%

0%

Total adjusted EBITDA

570

379

604

484

608

-22%

-1%

Associates

18

19

10

46

10

Adjusted EBIT

339

136

362

238

362

-43%

0%

Finance costs

(151)

(105)

(98)

(105)

(97)

Adjusted net income

167

77

206

136

206

-43%

0%

Source: Hellenic Petroleum data, Edison Investment Research

Our updated FY20 EBITDA estimate is currently 13% below consensus, while our FY21 EBITDA estimate is broadly in line with consensus.

Exhibit 6: Edison forecasts versus consensus

€m

Actual

Edison

Consensus

Difference (%)

 

FY19

FY20

FY21

FY20

FY21

FY20

FY21

Adjusted EBITDA, refining

346

245

387

Adjusted EBITDA, petrochemicals

93

66

90

Adjusted EBITDA, marketing

138

78

135

Other

(14)

(10)

(8)

Total adjusted EBITDA

570

379

604

434

620

-13%

-3%

Associates

18

19

10

 

 

Adjusted EBIT

339

136

362

88

380

54%

-5%

Finance costs

(151)

(105)

(98)

 

 

Adjusted net income

167

77

206

47

276

64%

-25%

Source: Hellenic Petroleum data, Edison Investment Research, Refinitiv estimates as at 17 September 2020

Valuation

We continue to value Hellenic using a blend of DCF, leveraged and unleveraged FY21e EV/EBITDA and FY21e P/E multiples, arriving at a valuation of €6.81/share, 3% lower than our last published estimate of €7.00/share, driven by slightly lower earnings estimates in FY21. Changes to our forecasts are shown in Exhibit 5 above.

Hellenic trades on FY21e multiples of 7.7x P/E and 5.9x EV/EBITDA compared to the European group averages of 5.9x and 4.2x, respectively. Its FCF yield is also slightly higher than the peer group average at 13.5% in FY21e and its EV per complexity adjusted barrel is higher than European peers at $1,330/bbld. At the same time, the company trades at a discount to US peers on the majority of valuation metrics. Our DCF valuation is based on discounted cash flows to 2025, using an unchanged 7% cost of capital. We incorporate a terminal value, which assumes the unwinding of working capital and a -1% terminal growth. This results in a DCF valuation of €7.73/share versus our previous estimate of €8.02/share. The reduction in DCF reflects lower refining margins in the first half of 2020 compared to 2019, together with our initial expectations, followed by the anticipated recovery in Q420.

Exhibit 7: Hellenic valuation

Source: Edison Investment Research. Note: Price as at 17 September 2020.

Since the beginning of the year, the market caps of Hellenic and its peers have decreased by an average of c 45%. Concerns about lower global demand for oil and petrochemicals have had an impact on global refining systems. Nonetheless, compared to its European peers, Hellenic benefits from a flexible refining system with large storage capacity and proximity to Middle East oil suppliers, taking advantage of crude spreads, especially on increasing freight rates.

Exhibit 8: Share price performance of Hellenic and its peers since January 2020

Source: Edison Investment Research, Refinitiv. Note: Prices as at 17 September 2020.

Exhibit 9: Peer group valuation table

Market cap
($m)

EV
($m)

P/E FY20e
(x)

P/E FY21e
(x)

EV/
EBITDA FY20e
(x)

EV/
EBITDA FY21e
(x)

FCF yield
FY20e
(%)

FCF yield FY21e
(%)

P/CF FY20e
(x)

P/CF FY21e
(x)

Net debt/
EBITDA FY20e
(x)

Net debt/
EBITDA FY21e
(x)

Div yield FY20e
(%)

Refining capacity
(kbod)

EV/bbld of complexity adjusted capacity ($/kbod)

Edison estimate – Hellenic

1,724*

3,909*

21.0

7.1

9.5

5.7

3.2%

14.6%

7.9

3.5

4.7

2.8

9.8%

344

1,317

Europe

2,335

3,858

6.8

5.9

6.9

4.1

-11.7%

12.9%

(0.7)

3.5

2.0

1.0

2.3%

385

1,010

Grupa Lotos

1,890

2,408

6.2

4.6

4.1

3.3

14.7%

16.0%

3.2

3.5

1.3

1.0

1.0%

211

1,142

Hellenic Petroleum (consensus)

1,849

4,215

5.0

5.9

10.9

4.8

-7.1%

18.9%

4.0

2.8

5.0

2.2

5.1%

344

1,317

Motor Oil Hellas Corinth Refineries

1,490

2,480

7.2

6.0

5.6

4.7

-28.2%

9.9%

7.5

3.4

0.9

0.8

6.7%

185

1,166

Polski Koncern Naftowy Orlen

5,485

8,681

6.2

4.8

4.2

3.4

-5.2%

3.8%

3.2

2.5

0.3

0.3

0.8%

707

1,335

Saras

634

994

7.5

9.1

3.6

2.7

-37.4%

21.3%

5.5

1.8

(0.4)

(0.3)

0.0%

300

283

Turkiye Petrol Rafinerileri

2,662

4,373

8.5

5.2

13.0

5.9

-7.1%

7.7%

(27.8)

7.2

5.1

2.3

0.1%

564

816

US

14,245

28,017

28.2

9.0

15.2

7.2

-4.5%

4.5%

19.7

5.0

4.1

2.1

7.3%

1,789

1,318

CVR Energy

1,469

2,786

46.7

11.7

21.7

6.8

-5.7%

12.1%

27.1

5.1

4.2

1.3

8.9%

185

1,158

HollyFrontier

3,540

5,650

18.2

6.5

9.5

5.8

-2.9%

-7.8%

9.1

5.3

2.6

1.6

6.4%

457

989

Marathon Petroleum

21,037

60,188

48.4

10.8

14.5

9.3

-5.4%

7.7%

37.8

3.7

6.6

4.2

7.1%

3,021

1,880

Phillips 66

25,311

40,447

11.1

7.8

14.2

7.3

-4.2%

4.9%

11.4

5.9

3.6

1.8

6.1%

2,184

1,684

Valero Energy

19,870

31,015

16.3

8.4

16.1

6.7

-4.5%

5.4%

12.8

5.1

3.7

1.5

8.1%

3,100

878

Average

7,247

13,929

16.1

7.3

10.4

5.5

-7.2%

9.6%

8.3

4.1

3.1

1.6

5.0%

967

1,164

Source: Edison Investment Research, Refinitiv estimates. Note: Prices as at 17 September 2020. *FX = US$1.10/€.

Exhibit 10: Financial summary

IFRS, year-end: 31 December

€m

 

2017

2018

2019

2020e

2021e

INCOME STATEMENT

 

 

 

 

 

 

 

Total revenues

 

 

7,995

9,769

8,857

6,554

6,556

Cost of sales

 

 

(6,907)

(8,770)

(8,052)

(6,503)

(5,748)

Gross profit

 

 

1,087

999

805

51

808

SG&A (expenses)

 

 

(410)

(475)

(470)

(459)

(460)

Other income/(expense)

 

 

(16)

(10)

6

15

14

Exceptionals and adjustments

 

 

18

(19)

2

(514)

0

Reported EBIT

 

 

662

514

341

(396)

362

Finance income/(expense)

 

 

(165)

(146)

(151)

(105)

(98)

Profit (loss) from JVs/associates (post tax)

 

 

31

(2)

18

19

10

Other income (includes exceptionals)

 

 

(8)

2

(1)

4

0

Reported PBT

 

 

520

369

207

(477)

275

Income tax expense (includes exceptionals)

 

 

(136)

(154)

(43)

161

(69)

Reported net income

 

 

384

215

164

(316)

206

Basic average number of shares, m

 

 

306

306

306

306

306

Basic EPS (€)

 

 

1.3

0.7

0.5

(1.0)

0.7

Adjusted EBITDA

 

 

833

730

570

379

604

Adjusted EBIT

 

 

644

533

339

136

362

Adjusted PBT

 

 

502

388

205

54

275

Adjusted net income

 

 

371

291

167

77

206

Adjusted EPS (€)

 

 

1.21

0.95

0.55

0.25

0.67

DPS (€)

 

 

0.40

0.75

0.50

0.50

0.50

BALANCE SHEET

 

 

Property, plant and equipment

 

 

3,312

3,269

3,298

3,220

3,198

Intangible assets

 

 

106

106

104

105

105

Other non-current assets

 

 

864

529

744

752

760

Total non-current assets

 

 

4,282

3,903

4,146

4,077

4,063

Cash and equivalents

 

 

1,019

1,276

1,088

924

441

Inventories

 

 

1,056

993

1,013

755

889

Trade and other receivables

 

 

791

822

840

709

771

Other current assets

 

 

12

3

6

8

8

Total current assets

 

 

2,878

3,094

2,947

2,396

2,109

Non-current loans and borrowings

 

 

920

1,627

1,610

1,032

582

Other non-current liabilities

 

 

300

420

617

458

458

Total non-current liabilities

 

 

1,220

2,047

2,227

1,490

1,040

Trade and other payables

 

 

1,661

1,349

1,402

1,377

1,472

Current loans and borrowings

 

 

1,900

1,109

1,022

1,649

1,649

Other current liabilities

 

 

7

97

115

113

113

Total current liabilities

 

 

3,568

2,555

2,539

3,139

3,234

Equity attributable to company

 

 

2,309

2,331

2,262

1,781

1,834

Non-controlling interest

 

 

63

64

65

63

63

CASH FLOW STATEMENT

 

 

Profit before tax

 

 

520

369

207

(483)

275

Depreciation and amortisation

 

 

189

197

231

243

242

Other adjustments

 

 

207

237

172

115

87

Movements in working capital

 

 

(463)

(296)

26

337

(100)

Income taxes paid

 

 

(10)

(5)

(149)

(11)

(69)

Cash from operations (CFO)

 

 

443

503

486

202

435

Capex

 

 

(209)

(157)

(241)

(149)

(220)

Acquisitions & disposals net

 

 

0

(16)

(5)

0

0

Other investing activities

 

 

24

311

29

12

9

Cash used in investing activities (CFIA)

 

 

(185)

138

(218)

(136)

(211)

Net proceeds from issue of shares

 

 

0

(1)

0

0

0

Dividends paid in period

 

 

(107)

(151)

(155)

(153)

(153)

Movements in debt

 

 

(35)

(97)

(111)

46

(450)

Other financing activities

 

 

(149)

4

(160)

(126)

(104)

Cash from financing activities (CFF)

 

 

(300)

(244)

(458)

(233)

(707)

Increase/(decrease) in cash and equivalents

 

 

(42)

397

(189)

(167)

(483)

Currency translation differences and other

 

 

(9)

5

2

4

0

Cash and equivalents at end of period

 

 

873

1,275

1,088

924

441

Net (debt)/cash

 

 

(1,802)

(1,460)

(1,544)

(1,757)

(1,790)

Source: Hellenic Petroleum, Edison Investment Research


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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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This report has been commissioned by Hellenic Petroleum and prepared and issued by Edison, in consideration of a fee payable by Hellenic Petroleum. 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.

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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 2020 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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