ProCredit Holding — Management expects ROE of c 10% in FY24

ProCredit Holding (XETRA: PCZ)

Last close As at 03/12/2024

EUR7.76

−0.10 (−1.27%)

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EUR458m

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Research: Financials

ProCredit Holding — Management expects ROE of c 10% in FY24

ProCredit Holding (PCB) posted a net profit of €27.2m in Q324 (down c 9% y o y), which represents an annualised return on equity (ROE) of 10.7% in the quarter. This is well within PCB’s previous ROE guidance of 10–12% for FY24, with the year-on-year fall reflecting, primarily, the impact of PCB’s investments as part of its updated strategy (see our previous outlook note for details). Management recently revised its FY24 ROE guidance to around 10%, mostly due to the temporary increase in the corporate income tax rate for Ukrainian banks from 25% to 50% in 2024 (which will have a high single-digit million euro negative impact on earnings), continued strong macroeconomic headwinds in Ecuador, as well as faster execution of some of its strategic investments and projects. Nevertheless, we remain confident in PCB’s ability to achieve its medium-term goals to grow its loan book to more than €10bn and reach a medium-term ROE of 13–14%.

Milosz Papst

Written by

Milosz Papst

Head of Content, Investment Trusts

Financials

ProCredit Holding

Management expects ROE of c 10% in FY24

Q324 results

Banks

22 November 2024

Price

€7.84

Market cap

€462m

Total assets at end-September 2024

€10.3bn

Shares in issue

58.9m

Free float

38.7%

Code

PCZ

Primary exchange

Frankfurt Prime Standard

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(3.0)

(14.0)

19.0

Rel (local)

(4.3)

(12.6)

0.6

52-week high/low

€10.0

€6.4

Business description

Based in Germany, ProCredit Holding operates regional banks across Southeastern and Eastern Europe and Ecuador. The banks focus on micro, small and medium-sized enterprises and private individuals.

Next events

Deutsches Eigenkapitalforum

25 November 2024

FY24 results

27 March 2025

Analyst

Milosz Papst

+44 (0)20 3077 5700

ProCredit Holding is a research client of Edison Investment Research Limited

ProCredit Holding (PCB) posted a net profit of €27.2m in Q324 (down c 9% yoy), which represents an annualised return on equity (ROE) of 10.7% in the quarter. This is well within PCB’s previous ROE guidance of 10–12% for FY24, with the year-on-year fall reflecting, primarily, the impact of PCB’s investments as part of its updated strategy (see our previous outlook note for details). Management recently revised its FY24 ROE guidance to around 10%, mostly due to the temporary increase in the corporate income tax rate for Ukrainian banks from 25% to 50% in 2024 (which will have a high single-digit million euro negative impact on earnings), continued strong macroeconomic headwinds in Ecuador, as well as faster execution of some of its strategic investments and projects. Nevertheless, we remain confident in PCB’s ability to achieve its medium-term goals to grow its loan book to more than €10bn and reach a medium-term ROE of 13–14%.

Year end

Net interest income (€m)

EPS*
(€)

DPS
(€)

P/BV
(x)

P/E*
(x)

ROE
(%)

Dividend yield (%)

12/22

264.6

0.28

0.00

0.53

28.0

1.9

N/A

12/23

337.2

1.92

0.64

0.47

4.1

12.2

8.2

12/24e

360.4

1.74

0.58

0.44

4.5

10.1

7.4

12/25e

383.0

1.86

0.62

0.41

4.2

10.1

7.9

Note: *EPS as reported by the company.

An attractive dividend even amid growth investments

PCB’s management now expects a cost-to-income ratio (CIR) of around 66% in FY24 (vs 63% ±1% previously and our last forecast of 65.0%). It is ahead of plan in terms of its strategic investments. For instance, it reached its end-December goal for headcount expansion at end-September. We expect further extensive expenses in FY25, and management indicated that it assumes a CIR peak around Q324–Q125, followed by a flattening out in subsequent quarters and conversion to its 57% CIR target over the medium term. We therefore assume CIRs of 66.0% and 67.7% in FY24e and FY25e, respectively. Still, our updated ROE forecast of 10.1% for both FY24e and FY25e, coupled with PCB’s target payout ratio of one-third, implies a healthy prospective dividend yield of c 7.5–8.0% (above the peer average of c 7.0% based on current LSEG consensus). PCB now trades at undemanding FY24e P/BV and P/E ratios of 0.4x and 4.5x, respectively, which becomes even more attractive if we assume a successful path to its medium-term targets.

Valuation: Potential to double in value

We have lowered our earnings forecast for FY24e to reflect the higher corporate tax rate in Ukraine and have made some limited downward revisions for subsequent years (mostly due to the situation in Ecuador). That said, our fair value estimate (based on FY24e tangible book value per share) for PCB’s shares increases slightly to €15.70 (vs €15.25 previously) due to discount unwinding, which is double the current share price. For now, we retain our sustainable return on tangible equity (RoTE) assumption of 11%. Incorporating PCB’s targeted 13–14% profitability would bring our valuation to €18.10–19.30/share (vs €17.55–18.70/share previously).

Q324 results shaped by PCB’s strategic agenda

PCB delivered sustained strong loan book growth of 9.0% in the first nine months of 2024 (9M24) to €6.8bn (of which 1.9% was in Q324), with more than 60% coming from lower-volume segments (micro, small and private clients), supporting the diversification of its loan portfolio. This was despite the €50m reduction in Ukrainian and Ecuadorian loan books in 9M24. PCB’s smaller regional banks grew their loan portfolios by around 15% in 9M24 and continue to outpace group growth, in line with management’s strategic objective for these banks to reach critical mass and realise economies of scale.

PCB’s net interest income (NII) remained broadly stable in Q324 at c €90.0m compared to last year and the two preceding quarters in 2024, as loan portfolio growth was coupled with a gradual, moderate NIM compression to 3.5% (9M24 NIM was up 4bp y-o-y). The latter stemmed from lower income on cash and cash equivalents (including central bank balances) amid falling base rates, especially in Eastern Europe (primarily Ukraine and Moldova). We calculate that in Southeastern Europe (SEE), NIM remained stable year-on-year at c 3.6%, supporting a 10% y-o-y increase in NII (and 18% in 9M24). In Ecuador, PCB faces continued margin pressure due to regulatory lending rate caps on SME loans, as well as a higher cash position held on the balance sheet amid tight liquidity in the local banking sector. Finally, Q324 NIM at group level reflects the first-time full-quarter recognition of interest expense on PCB’s €125m green tier-2 bonds placed in April 2024 (on which it pays a 9.5% coupon, or c €3m per quarter). We note that this temporary pause in NII growth at group level followed a quite dynamic increase since early 2022 (see Exhibit 1).

We also note that PCB’s deposit base grew significantly by 3.6% sequentially in Q324 (and 7.8% in 9M24), bringing the deposit-to-loan ratio to 115.3% at end-September 2024 (up from 111.4% at end-September 2023). The higher relation of deposits to loans offset part of the NIM compression as it allowed for a c €150m y-o-y reduction in expensive non-customer funding. Around 60% of the 9M24 deposit growth came from private clients, which supports PCB’s objective to improve the granularity of its deposit base.

Exhibit 1: PCB’s quarterly NII and NIM evolution

Source: ProCredit Holding data

With net fee and commission income up by a modest 2% y-o-y to €14.7m, PCB’s total operating income was also broadly in line with last year (up 1.4% y-o-y to €111.0m). This was coupled with a significant increase in both personnel (up 18.3% y-o-y) and administrative (up 26.6% y-o-y) expenses amid headcount expansion (the average number of staff was up by 13% or by more than 500 employees in 9M24), an average 4% salary increase in 9M24, as well as higher external IT costs, marketing expenses and depreciation to drive PCB’s new strategic agenda. As a result, PCB’s CIR reached 68.8% in Q324 (65.7% in 9M24) compared to 57.1% in Q323 (58.7% in 9M23).

PCB’s bottom line was assisted by the release of €10.4m in management overlays (mostly outside of Ukraine), with a further €51.6m remaining on PCB’s books (of which €21.9m was in Ukraine). Together with €9.6m in recoveries of written-off loans, this offset most of the €24.1m loss allowances in 9M24, which were mostly driven by loan book growth and stage transfers. Consequently, net provisions were at a limited level of €4.1m in 9M24 (representing 8bp of annualised cost of risk), while Q324 alone saw a net release of €1.6m. Encouragingly, the share of credit-impaired loans in PCB’s loan book fell to 2.3% at end-September 2024 (from 3.0% at end-September 2023) and is now back to levels seen before the war in Ukraine.

With a higher effective tax rate (24.9% in Q324 vs 22.3% in Q323), PCB’s net profit decreased by 9.1% y-o-y to €27.2m in Q324 and represented an annualised ROE of 10.7% (vs 12.5% in Q323) (see Exhibit 2). PCB’s CET-1 ratio of 14.1% and total capital ratio (TCR) of 17.3% at end-September 2024 remain well above regulatory requirements of 9.3% and 14.4%, respectively, with the TCR strengthened by the above-mentioned green tier-2 bonds issue. The CET-1 ratio at end-September 2024 does not include PCB’s Q324 results (if these were accounted for, the ratio would be 14.4%), though it is adjusted for the one-third dividend accrual from the H124 profit.

Exhibit 2: Q324 results highlights

€m, unless otherwise stated

Q324

Q323

y-o-y change

9M24

9M23

y-o-y change

Net interest income

90.0

89.0

1.1%

270.6

244.7

10.6%

Net interest margin (annualised)

3.5%

3.9%

(32) bp

3.6%

3.6%

4 bp

Expenses for loss allowances

(1.6)

8.5

NM

4.1

9.0

(54.6)%

Cost of risk (annualised, bp)

(10)

55

NM

8

20

-11 bp

Net fee and commission income

14.7

14.4

2.0%

44.0

43.2

1.8%

Pre-tax profit

36.2

38.5

(5.9)%

109.4

115.2

(5.0)%

Net income

27.2

29.9

(9.1)%

84.8

94.0

(9.8)%

RoE

10.7%

12.5%

(178) bp

11.3%

13.6%

(233) bp

CIR

68.8%

57.1%

1180 bp

65.7%

58.7%

693 bp

CET1 ratio (fully loaded)

14.1%

14.9%

(0.8) pp

14.1%

14.9%

(0.8) pp

Deposit-to-loan ratio

115.3%

111.4%

3.8 pp

115.3%

111.4%

3.8 pp

Gross loan portfolio growth (q-o-q)

1.9%

1.1%

0.8 pp

9.0%

1.9%

7.1 pp

Customer deposits growth (q-o-q)

3.6%

7.4%

(3.8) pp

7.8%

10.3%

(2.5) pp

Source: ProCredit Holding data

Ukraine highly profitable, but Ecuador still loss-making

While the frontline and macroeconomic situation in Ukraine remain tense, PCB’s local bank (the loan book of which made up 6.9% of PCB’s portfolio at end-Q324) has been performing well recently, with a €7.9m net profit in Q324 (€19.2m in 9M24), representing a healthy annualised ROE of 39.5% (33.7%). The Q324 results were supported by a c €2.2m net provision release, coming primarily from organic loan book reduction. The local bank retained a solid balance sheet at end-September 2024, with a deposit-to-loan ratio of 157% and a local capital buffer above 5pp. The share of its credit-impaired loans stood at 4.8% in Q324 (vs 10.5% in Q323), with a stage 3 coverage ratio of 83%.

While PCB’s SEE and Eastern European segments grew their profits by c 2% and 19% y-o-y, respectively, in Q324, the results of the Ecuadorian bank weighed on PCB’s group results. The difficult macroeconomic and sociopolitical situation persists in Ecuador, further exacerbated by a recent drought that significantly affected the local hydro-power-reliant energy sector. There is no major improvement in sight in the short term, with the International Monetary Fund forecasting GDP growth of 0.3% in 2024 and 1.2% in 2025. This situation, together with the corporate lending caps imposed on local banks, resulted in ProCredit Ecuador posting another quarterly net loss of €3.3m in Q324 (bringing the 9M24 loss to c €8.0m, ie a -23.7% ROE). The bank continues to rotate its lending book into smaller enterprises (for which lending caps are higher), while reducing its overall loan portfolio by €20.3m or c 4.2% year-to-date (the bank still represents c 7% of PCB’s loan book). The share of credit-impaired loans increased to 7.9% versus 6.9% at end-2023, and the 9M24 cost of risk reached 79bp (annualised).

ProCredit Bank Ecuador’s equity declined to €40.5m at end-September 2024 versus €48.9m at end-2023. In its quarterly report, PCB highlighted that due to covenant breaches by the Ecuadorian bank with respect to return on average assets, the loan loss reserve ratio, the solvency ratio, open assets exposure and tier 1 capital ratio, €18m of liabilities to banks (c 3% of the bank’s total assets) were classified as short term, though PCB does not expect early repayment of these liabilities. The corresponding waiver agreements had not been concluded by the time PCB’s consolidated Q324 accounts were prepared. That said, the local bank’s capital ratios are still more than 2pp above regulatory requirements, according to PCB’s management, which also noted that the bank’s funding includes a subordinated loan with a long maturity that can be converted to strengthen the bank’s equity. PCB’s management highlighted during the Q324 earnings call that PCB provided some group funding to its local bank in Ecuador, which, while significantly reduced recently, remains at a mid-two-digit million euro amount. We estimate that PCB’s total capital exposure to ProCredit Bank Ecuador is the equivalent of c 10% of our current PCB valuation.

Forecast and valuation revisions

PCB’s management recently updated its FY24 guidance and now expects loan book growth of more than 10% (previously around 10% excluding the impact of fx), an ROE of c 10% (vs 10–12% previously, based on up to 40bp cost of risk) and a CIR of 66% (previously 63% ±1%). Management also reiterated its CET-1 guidance of more than 13.0%, and expects a leverage ratio of 9% and a dividend payout ratio of one-third (in line with its dividend policy).

We now expect loan book growth for FY24e of around 11.0% (vs 11.6% previously), with c 11% pa on average thereafter until FY28e. While PCB has seen some moderate NIM pressure in recent quarters, this is well within our expectations, and we maintain our mid-term assumptions of c 3.5–3.6% (broadly in line with management’s earlier comments). This is underpinned by PCB’s strategic focus on: 1) increasing the diversification of PCB’s loan and deposit base through growing the number of clients in the micro, SME (with particular emphasis on loan exposures of €100–750k) and private segments; 2) a shift to higher-margin customer groups (micro and small enterprises); and 3) increasing its deposit-to-loan ratio (we conservatively expect 116.7% at group level by FY28e vs 115.3% at end-September 2024 and management’s target of 120%). That said, we acknowledge that recent rate cuts across the SEE region have been moderate so far, and the possibility of strong and fast rate cuts across countries where PCB operates represents a near-term downside risk.

While part of the recent CIR increase was due to bringing some growth investments forward, we conservatively assume FY24e and FY25e CIRs of 66.6% and 67.7%, respectively, followed by a gradual improvement to c 60% by FY28e (somewhat above management’s mid-term target of c 57%). We have reduced our FY24e ROE expectation to 10.1%, from 10.7% previously, mostly due to the temporarily higher corporate income tax rate in the Ukrainian banking sector, as discussed above (even if the law raising the tax rate is yet to be signed by the president). Accordingly, we estimate FY24e EPS of €1.74, which at a one-third payout ratio implies a dividend per share of €0.58, and which at the current share price represents an attractive dividend yield of 7.4%. We maintain our mid-term expectations of c 13%+ ROE by FY28e. Importantly, these forecasts already factor in a continued profitability drag from Ecuador (with the bank’s potential turnaround providing some upside opportunity).

Exhibit 3: Forecast revisions

 

2023

2024e

2025e

€m, unless otherwise stated

Actual

Old

New

Change

Growth
y-o-y

Old

New

Change

Growth
y-o-y

Net interest income

337.2

365.3

360.4

(1.3)%

6.9%

386.6

383.0

(0.9)%

6.3%

Net interest margin (%, annualised)

3.6%

3.6%

3.6%

0pp

(2.1)%

3.5%

3.5%

0pp

(0.1)pp

Expenses for loss allowances

15.5

25.4

8.3

(67.2)%

(46.3)%

20.9

19.0

(9.0)%

128.6%

Cost of risk (annualised in bp)

25

39

13

(26)bp

(49.6)%

29

26

(2)bp

13bp

Net fee and commission income

57.5

60.2

58.6

(2.6)%

1.9%

65.0

64.8

(0.3)%

10.5%

Operating expenses

247.0

288.8

292.2

1.2%

18.3%

317.0

317.3

0.1%

8.6%

Pre-tax profit

150.0

129.8

137.9

6.2%

(8.1)%

134.4

132.3

(1.6)%

(4.1)%

Net income

113.4

109.0

102.6

(5.9)%

(9.5)%

113.1

109.4

(3.3)%

6.6%

ROE

12.2%

10.7%

10.1%

(0.6)pp

(2.1)pp

10.4%

10.1%

(0.3)pp

0pp

CET-1 ratio (%)

14.3%

14.3%

14.3%

0pp

0pp

14.6%

14.4%

(0.2)pp

0.1pp

Total capital ratio (%)

15.8%

17.6%

17.4%

(0.2)pp

1.5pp

17.7%

17.2%

(0.4)pp

(0.1)pp

CIR (%)

59.9%

65.0%

66.6%

1.6pp

6.8pp

67.1%

67.7%

0.6pp

1.1pp

Gross loan portfolio

6,226.5

6,938.8

6,912.0

(0.4)%

11.0%

7,682.7

7,654.6

(0.4)%

10.7%

Net loan portfolio

6,029.7

6,734.2

6,717.7

(0.2)%

11.4%

7,483.2

7,469.9

(0.2)%

11.2%

Customer deposits

7,254.2

7,969.1

7,989.7

0.3%

10.1%

8,594.0

8,616.6

0.3%

7.8%

Source: ProCredit Holding data, Edison Investment Research

Exhibit 4: PCB’s P/BV-ROE valuation

€’000s unless otherwise stated

FY23

FY24e

FY25e

FY26e

FY27e

FY28e

Shareholder’s equity

983,789

1,045,014

1,120,167

1,213,412

1,324,123

1,458,792

Intangibles

22,732

22,732

22,732

22,732

22,732

22,732

Tangible equity

961,057

1,022,282

1,097,435

1,190,680

1,301,391

1,436,060

Net attributable profit

113,372

102,610

109,357

129,697

153,943

185,984

RoTE

12.5%

10.3%

10.3%

11.3%

12.4%

13.6%

Tangible equity per share (€)

16.3

17.4

18.6

20.2

22.1

24.4

Tangible equity per share (FY24e, €)

17.4

Sustainable RoTE

11.0%

Growth rate

2.0%

Cost of equity

10.9%

Fair value multiple – CAPM model

1.02x

Fair value multiple – regression multiple*

0.81x

Fair value multiple – simple average

0.91x

 

Fair value per share (€)

15.70

Current share price (€)

7.84

Potential upside/downside

100%

Source: ProCredit Holding data, Edison Investment Research. Note: *Average of FY23 and FY24e multiples based on LSEG Data & Analytics consensus for peers as at 20 November 2024.

Exhibit 5: P/BV versus ROE – PCB’s peers (2023)

Exhibit 6: P/BV versus ROE – PCB’s peers (2024e)

Source: LSEG Data & Analytics, Edison Investment Research

Source: LSEG Data & Analytics as at 20 November 2024, Edison Investment Research. Note: Excludes Bank of Georgia due to lack of consensus estimates for FY24 book value per share.

Exhibit 5: P/BV versus ROE – PCB’s peers (2023)

Source: LSEG Data & Analytics, Edison Investment Research

Exhibit 6: P/BV versus ROE – PCB’s peers (2024e)

Source: LSEG Data & Analytics as at 20 November 2024, Edison Investment Research. Note: Excludes Bank of Georgia due to lack of consensus estimates for FY24 book value per share.

Exhibit 7: Financial summary

Year ending 31 December, €000s

2021

2022

2023

2024e

2025e

2026e

2027e

2028e

Income statement

 

 

 

 

 

 

 

 

Net interest income

222,021

264,634

337,224

360,417

383,001

427,159

475,244

526,255

Net fee and commission income

50,855

54,731

57,525

58,608

64,781

69,078

73,759

78,860

Operating income

281,881

339,848

412,506

438,465

468,656

519,415

574,721

633,589

Operating expenses

180,859

217,428

246,979

292,222

317,324

339,173

361,900

380,484

Loss allowances

6,490

104,573

15,513

8,325

19,029

24,327

28,635

31,682

PBT

94,532

17,847

150,015

137,918

132,303

155,915

184,185

221,423

Net profit after tax

79,641

16,497

113,372

102,610

109,357

129,697

153,943

185,984

Reported EPS (€)

1.35

0.28

1.92

1.74

1.86

2.20

2.61

3.16

DPS (€)

0.00

0.00

0.64

0.58

0.62

0.73

0.87

1.05

Balance sheet

Cash and balances at central banks

1,545,523

1,939,681

2,347,617

2,435,161

2,590,425

2,905,946

3,279,625

3,704,684

Loans and advances to banks

252,649

280,453

372,141

372,141

372,141

372,141

372,141

372,141

Investment securities

410,400

480,168

750,542

750,542

750,542

750,542

750,542

750,542

Loans and advances to customers

5,792,966

5,892,796

6,029,715

6,717,716

7,469,874

8,337,293

9,291,094

10,357,248

Property, plant and equipment and investment properties

137,536

133,703

137,423

137,423

137,423

137,423

137,423

137,423

Intangible assets

18,411

17,993

22,732

22,732

22,732

22,732

22,732

22,732

Other assets

58,416

81,330

88,798

93,444

88,798

93,444

88,798

93,444

Total assets

8,215,901

8,826,124

9,748,968

10,529,160

11,431,934

12,619,521

13,942,354

15,438,214

Liabilities to banks

1,313,666

1,318,647

1,127,680

1,003,635

1,204,362

1,204,362

1,180,275

1,144,867

Liabilities to customers

5,542,251

6,289,511

7,254,236

7,989,704

8,616,598

9,710,940

10,947,149

12,343,749

Debt securities

353,221

191,988

147,088

147,088

147,088

147,088

147,088

147,088

Subordinated debt

87,390

93,597

139,269

246,813

246,813

246,813

246,813

246,813

Other liabilities

63,059

62,946

96,906

96,906

96,906

96,906

96,906

96,906

Total liabilities

7,359,587

7,956,689

8,765,179

9,484,146

10,311,767

11,406,110

12,618,231

13,979,422

Total shareholders' equity

856,314

869,435

983,789

1,045,014

1,120,167

1,213,412

1,324,123

1,458,792

BVPS

14.5

14.8

16.7

17.7

19.0

20.6

22.5

24.8

TNAV per share

14.2

14.5

16.3

17.4

18.6

20.2

22.1

24.4

Ratios

 

 

 

 

 

 

 

 

NIM

2.90%

3.11%

3.63%

3.55%

3.49%

3.55%

3.58%

3.58%

Costs/Income

64.2%

64.0%

59.9%

66.6%

67.7%

65.3%

63.0%

60.1%

ROE

9.7%

1.9%

12.2%

10.1%

10.1%

11.1%

12.1%

13.4%

CET1 ratio

14.1%

13.5%

14.3%

14.3%

14.4%

14.4%

14.4%

14.7%

Tier 1 ratio

14.1%

13.5%

14.3%

14.3%

14.4%

14.4%

14.4%

14.7%

Capital adequacy ratio

15.3%

14.3%

15.8%

17.4%

17.2%

17.0%

16.8%

16.9%

Payout ratio (%)

0.0%*

0.0%*

33.3%

33.3%

33.3%

33.3%

33.3%

33.3%

Customer loans/total assets

72.1%

69.1%

63.9%

65.6%

67.0%

67.5%

68.1%

68.5%

Deposits/loans

93.5%

103.0%

116.5%

115.6%

112.6%

113.9%

115.3%

116.7%

Source: PCB data, Edison Investment Research. Note: *In light of the war in Ukraine and the risk of a broader escalation of the conflict, which could have adversely affected PCB’s business in the entire region, no dividends were paid in 2022 and 2023, contrary to PCB’s dividend policy of distributing one-third of consolidated profits.


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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

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

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

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

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

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

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

Australia

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

New Zealand

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

United Kingdom

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

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

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

United States

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

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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