INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Consumer & Retail

Separating the wheat from the chaff

INDIA | CONSUMER & RETAIL| SECTOR UPDATE

9 April 2020

Post COVID-19 crystal gazing: Estimating earnings of our coverage companies for FY21-22 in a post-Covid world is difficult because it would involve gauging: (1) consumer behaviour towards low-ticket non-essential items; (2) whether customers will raise spending on hygiene/health products across categories; (3) how consumer companies will cope with supply-chain challenges if any; (4) second-level impact on demand due to job losses and plant shutdowns; and (5) if working capital requirement for consumer companies is likely to rise due to increasing salience of credit-oriented MT/e-commerce and cash-starved distributors. However, we put on our thinking caps and try our level best putting in all the inputs collected from channel checks, best of our learnings on consumer behaviour over the past decade, and intellectual capabilities to crystal gaze EPS estimates for FY21-22.

We have assumed only partial lifting of lockdown on a nation-wide level (after 15th

April 2020) and believe that India will gradually resume normalcy from July 2020. However, second-level consequences (job losses, reduction in discretionary spending) of coronavirus will prevail throughout FY21, curtailing demand to a significant extent.

We have cut our estimates by 5-35% for FY21-22 (see Figure 2) across coverage companies to account for a COVID-19 demand-related slowdown; (see Figure 3) for our revised recommendations/ratings. A benign RM Index (see Figure 1) will provide earnings resilience for most companies in a weak demand environment. Ability to retain gross margin tailwinds depends on a company’s respective market share within a particular category, the category’s growth rate, and competitive intensity.

Rich valuations of the sector to sustain in an otherwise TINA world: Most consumer companies (except with debt/corporate governance/category- and business-related issues) are likely to sustain rich valuations (see Figure 4 and 5) due to their relative earnings visibility, cash-rich balance sheet, superior FCF to PAT conversion, and higher return ratios. In this volatile, uncertain, complex and ambiguous (VUCA) world, the consumer staples sector is likely to re-gain the tag of TINA (there is no alternative), given most other market darlings (BFSI/IT) are facing their own challenges.

Behemoths over minnows: Which companies will navigate the crisis better? Those with higher links to essential products (see figure 6), lower contribution from out-of-home consumption, a market-leading position, and strong direct distribution reach. In staples, HUL, Nestle, Britannia and Dabur fit the bill. Investors should increase their weightage after a 10-15% correction in these names, given the recent rally, on hopes of a stimulus package. Tactically, increasing weight in ITC (out of favour stock) makes more sense due to margin of safety and initiation of capital re-engineering activities, as HUL might underperform until clarity emerges on the GSK Plc stake sale.

Lipstick effect to play-out in the discretionary space: We believe demand for discretionary goods/services is likely to be hardest hit, but low-ticket discretionary (QSR) items will see fastest recovery. Hence, we prefer JUBI over Asian Paints/Titan. Customers’ approach towards outside food should we monitored on a weekly basis once the lockdown is lifted; investors should take positions in JUBI on a staggered basis. In China, customers are refraining from visiting restaurants / malls despite the lockdown being lifted.

No-go zones - Bajaj Consumer, Emami, Colgate, Marico, and GCPL: Investors should stay away from these names because of promoter leverage/category-related challenges. Colgate ticks all the right boxes (essential product, strong distribution reach, lower out-of-home consumption) but high competitive intensity and lower category growth rate makes it a no-go stock.

Vishal Gutka, Research Analyst (+ 9122 6246 4118) vgutka@phillipcapital.in Preeyam Tolia, Research Associate (+ 9122 6246 4129) ptolia@phillipcapital.in

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CONSUMER & RETAIL SECTOR UPDATE

How/what has been the impact of COVID on consumer staples/discretionary? Essentials to take preference: Indian households have loaded up stocks of essential products, deferring purchase of non-essential home care / personal care products on the assumption that the national lockdown might last longer than 21 days. To maximise profits, semi-wholesalers/wholesalers (who deal with multiple companies) and distributors are allocating resources towards categories that are in high demand – packaged foods, hygiene-related products, thereby putting further strain on sales of non-essential products. We believe companies with higher sales from essential products (HUL, Britannia, Nestle), direct distribution reach, and lower out-of-home consumption are likely to benefit the most, but demand might decelerate in coming quarters (possibly in 1QFY21) once the lockdown stabilizes because of front-loading of many packaged foods. Seasonal products to take the hardest knock: Consumer companies with maximum exposure towards non-essential seasonal products are likely to be the hardest hit, since a major part of the season might be over once the lockdown is lifted (most likely after 30April). In our view, distributors might be not willing to stock up seasonal products mid-season, as, based on past experience, consumers generally show a lot of resistance in purchasing seasonal products mid-season; e.g, glucose powder and juices (Dabur), cooling oil (Emami). Discretionary demand taking a backseat: Jewellery and paints companies (within our coverage) will bear the maximum brunt since stores selling these products are completely shut during the lockdown. Also, the thought of purchasing impulse-driven products such as fashion jewellery or painting a home would be the last thing on consumers’ minds once the lockdown is lifted. However, there should be a gradual recovery in low-ticket discretionary items such as pizzas. Shutdown of manufacturing facilities/plants will weigh on growth: Consumer companies had shut down manufacturing plants producing non-essential products on the back of government directives in order to avoid spreadingCOVID-19. We believe most of the channel inventory of 4-5 weeks will be exhausted for non-essential home products and discretionary items, by the time national lockdown is lifted. However, personal-care product sales would be the most affected, as customers have stopped using them since they aren’t going out to workplaces or social gatherings and there is sufficient inventory with trade. Moreover, non-availability of migrant labour who work in transportation, and loading and unloading of goods, further add to woes. Distributors are operating at sub-optimal levels: Despite distributors having required inventory for essential products, they are not in a position to supply to general trade due to non-availability of the staff and partial closure of general / kirana stores. On the contrary, distributors are requesting retailers to come to their premises / warehouses and collect the required goods. Working capital intensity to go rise: Most consumer companies have extended credit period to the channel: (1) to tide over the crisis, and (2) in the wake of weak demand environment, which has persisted for a while.

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What trends are likely to play out in a post COVID-19 world? Consumption of essential products will be top-of-mind: We believe until economic activity comes back to normal levels, CPG companies with higher essential products (packaged foods, health, and hygiene) will get maximum customer priority. HUL, Nestle, and Britannia fit very well into this theme. Hygiene related categories / immunity boosting categories to get a leg-up: CPG companies have a golden opportunity to accelerate and develop ‘categories of tomorrow’ such as hand sanitizers, hand washes, and even health-based soaps to capitalise on the change in consumer behaviour because of the COVID-19 breakout. Demand for floor cleaners, disinfectants, and a toilet cleaner (the implementation of the Swacch Bharat mission had already given these a shot in the arm) is likely to move up, as consumers look at more ways to eradicate viruses. With the emergence of Patanjali, consumers had already shown a higher inclination towards natural (chemical-free) and immunity-boosting products, so we believe Dabur is rightly positioned to capture this trend from its plethora of health-based products such as Chyawanprash, Ratnaprash, and Tulsi Drops. Modern trade to suffer; e-commerce to gain: In our opinion, modern trade players who are only doing offline sales (with minimal online presence) are likely to suffer (contrary to market expectations), even if social distancing norms are followed even for next six months. Abeyance to social distancing norms, along with consumer resistance in highly congested areas, can significantly impact flow of customer traffic Moreover, consumers are likely to show higher resistance in purchasing large or jumbo packs (which is the USP of MT players) in times of economic slowdown; this can significantly hurt margins of companies. However, MT players such as Dmart, who have shown greater adaptability, bringing their Omni-channel capabilities at play, are likely to win the game. D-mart has allowed its customers to book orders on the D-mart Ready App, even if there is no D-mart Ready store located in the same vicinity, and customers can pick-up orders at from large-format Dmart stores. In order to comply with social distancing norms, it has decided to open outlets 24*7 in selected areas. Dmart has started ‘store on wheels’ — a service that will facilitate DMart trucks carrying essential grocery items to be parked in residential societies for three hours. Residents can come out a buy these items, thus obeying social distancing norms.

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Rural demand is poised to fall: Majority of market participants believe rural demand is not likely to be impacted in a meaningful manner since COVID-19 is more of urban phenomenon. However, we believe the urban to rural migration of workers will result in a sharp fall in remittances, thereby impacting consumption demand. Moreover, migrant workers are likely to return to urban areas after the monsoon only since they have a natural tendency of going back to villages for farm work during the rainy season. With excess supply of manpower in rural areas, rural wages are headed down; the government’s announcement of welfare measures are too little to move the needle. Demand of consumer goods will take a hit. Rural recovery on bumper rabi crop harvest and higher milk prices – in vain! Farmers have not been able to export their agricultural produce due to COVID-19-related challenges in the developed world. We believe that a majority of farmers are finding it difficult to reap their harvests due to non-availability of labour / machines, and lack of public transport that would have otherwise facilitated migrant workers in reaching farms. Even if farmers are able to reap their harvest, they have not been able to realize proceeds from the sale of agricultural produce, as most of the mandis (agricultural markets) are not operating. Procurement prices for milk, the largest agricultural-based commodity, have declined c.30% since March 2020. The HORECA segment (sweet shops, tea stalls, etc.) have completely stopped milk purchases. Moreover, we believe full recovery of milk prices in a post COVID-19 world is an unlikely scenario because farmers’ realisations are likely to be lower – prices of cattle-feed, a key raw material for producing milk, have seen a steep decline due to a sharp fall in demand from the poultry sector and bumper crop harvests, which is why milk co-operatives and companies will procure from farmers at lower rates. HORECA demand will take its own time some to come back to normal. Non-availability of migrant workers will hit distributors’ supply chains system; will not work at optimum levels: Distributors’ operations might get affected due to non-availability of low-cost migrant laborers; generally, local population in most key cities show unwillingness to toil hard at low wages. Cutback in global remittances to cast a shadow on urban demand: We believe major remittances that come to India via Middle East countries is likely to suffer a meaningful blow because of the outbreak, lower oil prices (crude prices have fallen c.50% in the last 3 months), and job losses. Downtrading is “eminent”: With consumer income under severe stress, Indian households are likely to shift to economy products within a category. However, CPG companies are likely to use windfall from benign raw-material prices, at least in pushing “recruiter packs” of premium products, thereby keeping the flag of premiumization flying high. “Wealth effect” is showing divergence, based on geographies: We believe companies with a higher contribution from south India, with the right product portfolio mix, are likely to show much better resilience. This is because of major investments of south India households are in gold (where price have risen c.28% yoy in past one year – more financial comfort). Companies with higher contribution from north India are likely to take a bigger hit, given real estate being a major investment in the north, where price are likely to crack because of the pandemic (less financial comfort).

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Figure 1 : Raw material tailwinds to help in an otherwise weak demand environment Commodity Units FY20 FY21E* yoy (%)

HPC

Soda Ash INR/50kg 1,248 1,160 (7.0)

PFAD USD/mt 496 560 12.9

Copra INR/qt 45 45 (0.0)

Mentha oil INR/kg 1,447 1,340 (7.4)

Corn (Sorbitol) USD/bu 384 332 (13.6)

Palm oil (India) INR 606 649 7.2

Food & Beverages

Barley INR/qt 1,887 1,644 (12.9)

Maize USD/bu 384 332 (13.6)

Coffee Robusta USD/mt 1,326 1,206 (9.0)

Coffee Arabica USD/lb 104 120 14.8

Skimmed Milk Powder EUR/mt 384 332 (13.6)

Wheat INR/qt 2,144 2,200 2.6

Milk Powder INR/ltr 45 30 (32.7)

Gur & Sugar INR/qt 3,585 3,450 (3.8)

Sunflower INR/10kg 825 848 2.8

Safflower INR/10kg 1,781 1,995 12.0

Rice Bran INR/10kg 621 628 1.3

Packing materials

HDPE INR 90 87 (3.8)

LLP INR 45 45 (0.0)

Other data

TiO2 INR/kg 261 250 (4.3)

Vinyl Acetate Monomor CNY/mt 6,426 5,250 (18.3)

Brent Crude USD/bbl 61 32 (47.8)

WTI Crude USD/bbl 55 24 (57.0)

Gold spot (MCX) INR/10g 36,971 40,989 10.9

Diamond USD/carat 117 114 (2.8)

FY21 estimates based on the assumption that current market prices prevail for rest of the year.

Source: Bloomberg ; PhillipCapital estimates

Figure 2: Cut estimates by 5-35% across companies to account for the coming slowdown (Rs bn) Old EPS (Rs) New EPS (Rs) % change

FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22

Large Caps

ITC 12.1 13.1 14.4 11.2 11.1 13.1 (7.5) (15.3) (9.2)

HUL 32.9 41.3 47.1 32.4 39.9 45.5 (1.6) (3.5) (3.4)

Asian Paints 29.3 34.8 41.9 29.0 30.5 36.5 (1.0) (12.4) (12.9)

Food companies

Nestle (CY)* 196.2 232.9 271.3 196.2 215.9 256.6 - (7.3) (5.4)

Britannia 58.7 69.4 79.6 58.3 63.1 72.3 (0.6) (9.0) (9.2)

Diversified Indian companies

Colgate 29.4 32.6 35.6 29.3 30.8 33.6 (0.3) (5.5) (5.4)

Marico 8.2 8.9 10.0 7.9 8.1 9.1 (3.0) (8.9) (9.4)

Emami 12.5 13.6 14.7 11.9 11.6 12.7 (4.7) (14.5) (13.7)

Dabur 9.1 10.3 11.8 9.1 9.7 10.9 0.1 (6.0) (7.9)

GCPL 15.3 17.7 19.8 15.0 15.9 18.0 (1.6) (10.0) (9.2)

Retail &Discretionary

Titan 16.5 20.4 25.0 15.7 16.8 21.4 (5.0) (17.9) (14.4)

Jubilant Foods 31.5 41.5 49.0 28.4 27.3 38.8 (10.0) (34.2) (20.9)

Thangamayil 37.2 49.3 57.6 34.0 37.3 44.5 (8.5) (24.3) (22.7)

Small – Caps

Bajaj Corp 15.7 16.1 17.4 14.8 13.8 15.0 (5.2) (13.9) (14.2)

Agro Tech Foods 14.8 18.9 22.1 16.3 15.1 21.2 10.0 (20.1) (4.0)

Source: Phillip Capital estimates

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Figure 3: Maintain high-conviction BUY on HUL, Nestle, Dabur, and Jubi on 10-15% correction in stock prices

Name

Rating Target PE multiple x TP (Rs)

Old New Old New Old New

Large Caps

ITC NEU BUY 15 15 215 200

HUL BUY BUY 50 50 2,360 2,300

APNT BUY BUY 50 50 2,100 1,825

Food companies NEST BUY BUY 55 55 15,500 16,000

BRIT NEU NEU 40 40 3,200 2,900

Diversfied Indian companies CLGT SELL SELL 30 30 1,075 1,010

MRCO NEU NEU 30 30 300 275

HMN NEU NEU 20 15 290 190

DABUR BUY BUY 45 50 530 545

GCPL SELL SELL 30 30 600 540

Retail &Discretionary TTAN NEU NEU 45 45 1,125 965

JUBI NEU BUY NA 40 1,750 1,550

TJL BUY BUY 10 10 575 445

Small - Caps BJCOR NEU NEU 10 10 175 150

ATFL BUY BUY 35 30 810 635

Source: Phillip Capital estimates

Figure 4: Valuation for consumer sector expected to remain rich due to the TINA factor

Name

Current - PE (x) PE (x) to 5 year average PE

FY21 FY22 Last 3 year avg Last 5 year avg +1SD +2SD

Large Caps

ITC 16 14 25 25 27 30

HUL 62 55 43 38 45 53

Asian Paints 53 45 47 45 50 55

Food companies

Nestle 78 66 47 47 53 59

Britannia 45 39 44 40 47 53

Diversfied Indian companies

Colgate 43 39 40 40 43 47

Marico 34 31 40 38 42 46

Emami 18 16 37 45 58 72

Dabur 49 44 40 38 43 47

GCPL 35 31 41 37 45 53

Retail &Dicretionary

Titan 56 44 53 44 59 74

Jubilant Foods 62 47 44 49 76 102

Thangamayil 6 5 11 12 16 19

Small – Caps

Bajaj Corp 10 9 24.3 25.6 30.6 35.5

Agro Tech Foods 33 24 37.9 41.1 50.1 59.1

Source: Phillip Capital estimates

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Figure 5: Revenue, Ebitda, and PAT CAGR; FCF, dividend-pay-out ratio

Name

% Cagr FY19-FY22 FCF (% of NP) Dividend Payout (%) ROE (%)

Revenue Ebitda PAT FCF FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22

Large Caps ITC 6 4 9 18 95 92 91 71 81 84 23 22 25 HUL 13 17 21 28 114 118 109 77 80 77 50 11 10 APNT 7 11 18 44 98 100 92 38 49 49 25 23 24

Food companies NEST 10 9 15 13 110 103 110 155 69 68 93 78 72 BRIT 8 9 14 28 99 97 90 27 35 38 32 29 27

Diversified Indian companies CLGT 6 5 7 4 101 104 107 85 88 89 56 55 56 MRCO 5 9 8 10 108 100 97 63 74 72 31 29 30 HMN 3 3 6 8 89 90 90 59 54 58 16 18 18 DABUR 7 9 8 13 94 95 95 38 46 46 25 23 23 GCPL 4 7 7 5 97 97 97 67 75 78 20 20 22

Retail & Discretionary TTAN 11 14 10 21 128 105 96 38 42 37 20 19 22 JUBI 11 9 16 22 72 92 98 21 29 28 23 19 23 TJL 8 10 19 NA 70 116 87 21 21 18 20 19 19

Small – Caps BJCOR 1 -4 -0 9 98 96 97 94 101 94 50 47 49 ATFL 6 11 15 NA 107 103 90 15 17 12 10 8 11

Source: Phillip Capital estimates

Figure 6: Company wise salience from essential products Companies Essential portfolio Categories

HUL 60-65% Fabric wash, Soaps, Tea, Home care, Oral care

Nestle 70-75% Milk Products, Prepared dishes (Maggi)

Britannia 85-90% Biscuits, Bread & Rusk, Dairy

Dabur 45-50% Health supplement, Digestive, OTC &Ethicals, Oral care

Marico 60-65% Coconut oil, Saffola (edible oil)

GCPL 30-35% Soaps

Source: Phillip Capital estimates

Figure 7: COVID–19’s major impact - summer portfolio, discretionary Dabur 15-20% Juices, Glucose

Emami 20-25% Cooling oil, Cooling talc

Source: Phillip Capital estimates

Figure 8: International operations GCPL 50% Indonesia, Africa, Latam

Dabur 27% ME, Aisa, Africa, Americas, Europe

Emami 12% SAARC, MENAP, CIS, Africa, Others

Marico 22% Bangladesh, SE Asia, MENA, South Africa, Exports

Figure 9: FMCG index trading at multi-year high premiums to Nifty Index

Source: Bloomberg

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Rating methodology We rate stock on absolute return basis. Our target price for the stock has an investment horizon of one year. We have different threshold for large market capitalisation stock and mid/small market capitalisation stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large-cap stocks Rating Criteria Definition

BUY >= +10% Target price is equal to or more than 10% of current market price

NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%

SELL <= -10% Target price is less than or equal to -10%.

Mid-cap and small cap stocks Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

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CONSUMER & RETAIL SECTOR UPDATE

Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

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No

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No

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No

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Kindly note that past performance is not necessarily a guide to future performance.

For Detailed Disclaimer: Please visit our website www.phillipcapital.in IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report is a product of PhillipCapital (India) Pvt. Ltd. which is the employer of the research analyst(s) who has prepared the research report. PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.

Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.

The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication Compensation and Investment Banking Activities

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Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report.

PHILLIPCAP may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of PHILLIPCAP.

Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States.

The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments.

Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein.

No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior written consent of PHILLIPCAP and PHILLIPCAP accepts no liability whatsoever for the actions of third parties in this respect.

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