Professional Documents
Culture Documents
Resilience Has Its Price: PSI Software
Resilience Has Its Price: PSI Software
15
Source: Pareto
PSI Software
Spons ored Research Update
Actual
PSI Software AG 2018 2019 yoy (%)
Revenues EURm 199 225 13.1
PSI reported sound 2019 numbers on the 24th of March. The revenue target of
EUR 220m and the EBIT guidance of “almost EUR 17m” were surpassed. Energy
Management (EM) could strongly expand revenues helped by the BTC
acquisition, which was consolidated since the beginning of year. In our
understanding, the main “asset” of this EUR 4m deal were the ~160 IT specialists
that became part of the PSI group. Because of the related integration costs of
EUR 2.1m, the earnings dynamic lagged revenue growth.
The order entry increased by 9% in 2019 to EUR 236m. The order book
nevertheless stood at “only” EUR 142m at the end of 2019, because PSI books
the relevant share of multi-year maintenance contracts only at the beginning of
the fiscal year. Accordingly, the order book stood at EUR 182m at the end of
February 2020. Taking 2019 as a yardstick, this means that PSI’s “capacity” is
already almost fully booked for the remainder of the year: Dividing EUR 225m by
12 months results in a monthly “capacity” of EUR 18.75m. The order book of
EUR 182m divided by EUR 18.75m then equals 9.7 months.
PSI made progress in 2019 regarding the migration of its product offering to the
PSI Java platform, too. According to PSI, two thirds of products run on the
platform, which is huge step towards a higher degree of standardization. We
understand that 100% of the PM business and one third of EM run on the
platform, so the migration of a higher share of EM business will be clearly the
focus in the future. PSI might be ahead of a breakthrough in this regard as it has
secured a 3-year contract from a Polish customer, active in managing gas
pipelines, which is supposed to make use of the platform. All in, PSI increase the
share of “product” compared to “project” business from 52% in 2018 to 56% in
2019. PSI interprets licenses, maintenance / upgrade, and cost-plus projects as
“product” business (see below).
Outlook
Full year 2020
As for many other companies, the impact from the coronavirus pandemic is hard
to assess at present. However, PSI was one of the few companies that already
provided an outlook for 2020 including COVID 19. PSI guided for a slight decrease
in revenues and a drop of operating earnings by 20%. Without corona, PSI had
expected a 10% rise in revenues. Even more insightful from an analytical point of
view was the fact that PSI’s management shared its thoughts on potential
negative but also positive repercussions of the crisis on the company.
Main negatives:
On top of that, the business in Malaysia and Russia might suffer from lower oil
price. With view to the strong existing order book, the “depth” of a crisis is less
of a concern for PSI. For PSI, it is more important that the crisis will be overcome
within one year or less.
Main positives:
PSI spots potential M&A targets mainly in EM but does not feel under time
pressure in that regard.
Overall, as a company with Chinese operations, PSI was not as surprised as many
other companies by the outbreak of COVID 19 and took actions before the full
extent of the problem became visible. For instance, PSI declared a hiring freeze
at the end of February and already reduced the workforce in Malaysia. Also, PSI
will have some means to counterbalance a drop of revenues if the crisis escalates
further, i.e. by making use of early retirement and other measure to reduce
personnel cost. PSI believes it can reduce personnel cost of EUR 138m by
EUR 25m (18%) without incurring restructuring costs.
With view to order book and the line of reasoning reproduced above, we think it
is very conservative for the time being to expect a drop of operating earnings by
20% in 2020. We think that PSI will be able deliver a better result if things
normalize in the second half of 2020, which is our core scenario for the time
being. Thus, we expect a 10% drop of earnings for 2019 and V-shaped recovery
in 2021.
From this, we constructed the following P&L forecast below for the coming years:
Profit & Loss 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e
Revenue 176 175 184 177 186 199 225 225 237 247 255
% yoy -2.5% -0.5% 4.7% -3.7% 5.2% 7.0% 13.1% 0.0% 5.3% 4.0% 3.5%
EBITDA 8 12 15 16 18 20 28 26 32 34 36
% of sales 4.5% 6.6% 8.4% 9.1% 9.5% 10.1% 12.5% 11.7% 13.4% 13.7% 14.1%
EBIT 4 8 11 12 13 15 17 15 21 23 25
% of sales 2.4% 4.4% 6.0% 6.7% 7.2% 7.8% 7.6% 6.9% 8.9% 9.4% 9.9%
Pretax Profit 3 6 9 11 13 15 16 15 20 22 25
% of sales 1.7% 3.2% 5.1% 6.4% 6.7% 7.3% 7.3% 6.4% 8.5% 9.1% 9.6%
Net Profit 0 4 7 9 9 11 14 13 18 19 21
% of sales 0.2% 2.3% 4.1% 4.8% 5.1% 5.3% 6.3% 5.6% 7.4% 7.9% 8.4%
EPS 0.02 0.26 0.48 0.55 0.61 0.68 0.91 0.80 1.12 1.24 1.36
% yoy 1007.2% 82.3% 14.7% 10.9% 11.2% 34.8% -11.7% 39.6% 10.7% 9.7%
DPS 0.00 0.00 0.21 0.22 0.23 0.25 0.05 0.30 0.41 0.46 0.50
Payout ratio 0% 0% 44% 40% 38% 37% 5% 37% 37% 37% 37%
Q1 2020
In line with the scenario described above, we expect a Q1 that is only slightly
impacted by the coronavirus.
Exhibit 4: Q1 estimates
Actual Pareto
PSI Software AG Q1 2019 Q1 2020e yoy (%)
Revenues EURm 52.0 52.8 1.6
Valuation
Exhibit 5: DCF
Revenues 225 237 247 255 263 271 279 287 296 305
growth rate 0.0% 5.3% 4.0% 3.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
EBIT 15.5 21.1 23.1 25.2 26.5 27.3 28.2 29.0 29.9 30.8
EBIT margin 6.9% 8.9% 9.4% 9.9% 10.1% 10.1% 10.1% 10.1% 10.1% 10.1%
Tax (2.0) (2.8) (3.1) (3.3) (3.5) (3.6) (3.7) (8.0) (8.3) (8.5)
Tax rate 13% 13% 13% 13% 13% 13% 13% 28% 28% 28%
Depr. & Amort. 5.6 5.3 5.0 4.9 4.8 4.4 4.3 4.2 4.3 4.4
% of sales 2.5% 2.2% 2.0% 1.9% 1.8% 1.6% 1.5% 1.5% 1.5% 1.4%
Capex (4.3) (4.3) (4.4) (4.6) (4.7) (4.5) (4.4) (4.4) (4.5) (4.6)
% of sales 1.9% 1.8% 1.8% 1.8% 1.8% 1.7% 1.6% 1.5% 1.5% 1.5%
Change in WC 0.0 (2.9) (2.3) (2.1) (1.9) (1.9) (2.0) (2.0) (2.1) (2.2)
% of sales 0.0% 1.2% 0.9% 0.8% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
Free Cash Flow 14.7 16.4 18.3 20.0 21.2 21.7 22.3 18.8 19.3 19.9 469
growth rate nm 11.1% 11.8% 9.2% 6.1% 2.4% 2.7% -15.9% 2.9% 2.9% 3.0%
Present Value FCF 14.0 14.5 15.1 15.3 15.2 14.5 13.8 10.8 10.4 9.9 235
Due to the first-time application of IFRS 16, the company has recognized
EUR 22.1m right of use assets and a corresponding liability of EUR 22.5m on the
2019 balance sheet. Also, the depreciation for 2019 included an amount of
EUR 5.2m referring to right of use assets. Interest payments on recognized lease
liabilities will not be reported any more as operational expenses but as part of
the financial result in 2019.
For valuation purposes, we will only add back depreciation to EBIT in our DCF
framework that do not refer to rights of use assets. Correspondingly, we will only
deduct capex for fixed assets other than right of use assets from free cash flow.
We will however account for the move of the interest component of the leasing
arrangements into the financial result by deducting the leasing liabilities from the
enterprise value from now on, treating them in analogy to interest bearing net
debt and pension liabilities.
The tax rate was at 13% in 2019 because PSI has a substantial tax loss carry
forward at its disposal, which can be used for another 7-8 years, we believe. After
that period, we expect the tax rate to go up to 28.8%.
The pension provision is up yoy as the discount factor is down from 1.7% to 0.9%
in Germany and from 1.8% to 0.5% in Austria. From these levels, we don’t see a
lot of downside risk remaining.
All in, we stick to our price target of EUR 21, which translates into an upside of
23%. The recommendation remains “Buy”.
PE Share price
26
29
24
27
22
25
20
23
18
21 16
19 14
17 12
15 10
Oct-15
Oct-18
Oct-19
Oct-16
Oct-17
Jul-15
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jan-16
Apr-15
Apr-16
Apr-17
Apr-18
Apr-19
PE - NTM (lhs) Average PE Share Price (rhs)
Nevertheless, PSI is no deep value call at present valuation levels. In fact, it has
strongly outperformed the TecDAX since the beginning of the crisis and currently
trades at a premium of 18% to the index, which compares with an average
premium of ~3% over the last five years. PSI is not a member of the TecDAX at
present, but as there is no close peer group available because of PSI’s unique set-
up, we think the index serves very well as a benchmark for PSI.
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Jul-15
Jan-16
Jul-16
Jul-17
Jul-18
Jul-19
Jan-17
Jan-18
Jan-19
Jan-20
Apr-15
Apr-16
Apr-17
Apr-18
Apr-19
At a glance
Exhibit 8: At a glance
Business Units Energy Management Production Management
Software solutions to control and manage flows for utilities, powered by PSI's proprietary algorithm that Software products and tailored solutions for production planning, namely production control and logistics,
solves resource allocation and cost minimisation problems. supported by PSI's patented algorithm that optimises resources.
Products/
Examples of product portfolio include: PSIcontrol (Control system for managing electricity grids); PSIganesi Some examples of product offering include: PSImining (Instrumentation and control of the production
applications
(Network simulation system for the gas market); PSImarket (Energy trading and sales system); PSIairport supervision of mines); PSImetals (solution for the entire value added chain in the metals industry); PSIglobal
(Solutions for passenger, baggage and air cargo processing) (Planning, analysis and optimisation of logistics networks)
For Energy Management, clients served operate in: gas, oil, electricity, heating, energy trading and public transportation industries.
For Production Management, the client base is comprised by: raw material extraction, metal production, automotive, mechanical engineering and logistics industries.
Customers
Important individual customers are DB and public city transport ("S-Bahnen"), Gazprom, E.on. and innogy.
Limited cluster risk: No customer stands for more than 5% revenue share, 3-4% are already high levels.
Rising emphasis on renewables increases requirements for grid management, but PSI can also capitalize on other aspects of changes in emission policy like decarbonisation of steel.
Electrification of car fleet will results in increased energy consumption from private and public households. Electrification of bus pool.
Drivers
Profitability of customer industries plays a role, as very bad and very good customer profitability is not supportive to do business.
Seasonality in Electricity Management (particularly in Q4) which is offset by PSI serving different customer industries.
Main
Competitor are mostly sub-divisions of larger conglomerates such as Navitec, Siemens, Schneider Electric, ABB. Exceptions are verticals like Automotive and Logistics.
competitors
Entry barriers/ Sunk costs in the software business. Spending of certain industries/regions in Software
competitive PSI has over 50 years of experience, resulting in a high degree of vertical and technology know-how. PSI Software edge comes from having a well-established industry footprint, thanks to its long-standing customer relations
advantage and solutions' reputation.
Sales split by region Sales split by division EBIT split by region Group financial development
Middle East
EBIT margin
# of employees
1,984
FY 2019
PROFIT & LOSS (fiscal year) (EURm) 2015 2016 2017 2018 2019 2020e 2021e 2022e
Revenues 184 177 186 199 225 225 237 247
EBITDA 15 16 18 20 28 26 32 34
Depreciation & amortisation (4) (4) (4) (5) (11) (11) (11) (11)
EBIT 11 12 13 15 17 15 21 23
Net interest (2) (1) (1) (1) (1) (1) (1) (1)
Other financial items - - - - - - - -
Profit before taxes 9 11 13 15 16 15 20 22
Taxes (2) (3) (3) (4) (2) (2) (3) (3)
Minority interest - - - - - - - -
Net profit 7 9 9 11 14 13 18 19
EPS reported 0.48 0.55 0.61 0.68 0.91 0.80 1.12 1.24
EPS adjusted 0.48 0.55 0.65 0.68 0.91 0.80 1.12 1.24
DPS 0.21 0.22 0.23 0.25 0.05 0.30 0.41 0.46
BALANCE SHEET (EURm) 2015 2016 2017 2018 2019 2020e 2021e 2022e
Tangible non current assets 12 12 13 14 15 15 15 15
Other non-current assets 96 96 90 94 106 104 106 107
Other current assets 53 48 54 57 90 90 92 94
Cash & equivalents 39 43 38 45 39 52 63 74
Total assets 200 199 194 209 249 261 275 290
Total equity 73 75 80 87 95 106 119 132
Interest-bearing non-current debt 0 - - - - - - -
Interest-bearing current debt 3 - 3 2 1 1 1 1
Other Debt 76 72 61 69 98 98 100 102
Total liabilites & equity 200 199 194 209 249 261 275 290
CASH FLOW (EURm) 2015 2016 2017 2018 2019 2020e 2021e 2022e
Cash earnings 11 14 12 19 23 18 23 24
Change in working capital 3 (1) (11) 0 (11) - (3) (2)
Cash flow from investments (2) (3) (4) (7) (9) (4) (4) (4)
Cash flow from financing (2) (7) (1) (5) (10) (1) (5) (6)
Net cash flow 10 4 (5) 6 (7) 13 11 11
CAPITALIZATION & VALUATION (EURm) 2015 2016 2017 2018 2019 2020e 2021e 2022e
Share price (EUR end) 12.9 12.2 18.5 15.7 20.8 17.2 17.2 17.2
Number of shares end period 16 16 16 16 16 16 16 16
Net interest bearing debt (35) (43) (36) (43) (38) (51) (62) (73)
Enterprise value 214 201 306 254 343 273 262 251
EV/Sales 1.2 1.1 1.6 1.3 1.5 1.2 1.1 1.0
EV/EBITDA 13.9 12.4 17.2 12.7 12.2 10.4 8.3 7.4
EV/EBIT 19.3 16.9 22.9 16.4 19.9 17.7 12.5 10.9
P/E reported 27.0 22.3 30.5 23.2 22.9 21.4 15.3 13.9
P/E adjusted 27.0 22.3 28.4 23.2 22.9 21.4 15.3 13.9
P/B 2.8 2.5 3.6 2.8 3.4 2.5 2.3 2.0
FINANCIAL ANALYSIS & CREDIT METRICS 2015 2016 2017 2018 2019 2020e 2021e 2022e
ROE adjusted (%) 11.5 13.1 12.7 15.7 12.5 15.6 15.5
Dividend yield (%) 1.6 1.8 1.2 1.6 0.2 1.7 2.4 2.7
EBITDA margin (%) 8.4 9.1 9.5 10.1 12.5 11.7 13.4 13.7
EBIT margin (%) 6.0 6.7 7.2 7.8 7.6 6.9 8.9 9.4
NIBD/EBITDA (2.30) (2.67) (2.00) (2.13) (1.34) (1.93) (1.94) (2.16)
EBITDA/Net interest 8.50 21.53 19.04 18.91 26.71 21.11 28.58 33.73
Opinions or suggestions from Pareto Securities Research may deviate from recommendations or opinions presented by other depar tments or companies in the Pareto Securities Group. The reason may
typically be the result of differing time horizons, methodologies, contexts or other factors.
Sponsored research
Please note that if this report is labelled as “sponsored research” on the front page, Pareto Securities has entered into an agreement with the company about the preparation of research reports and
receives compensation from the company for this service. Sponsored research is prepared by the Research Department of Pareto Securities without any instruction rights by the company. Sponsored
research is however commissioned for and paid by the company and such material is considered by Pareto Securities to qualify as an acceptable minor non-monetary benefit according to the EU MiFID II
Directive.
Pareto Securities Research may provide credit research with more specific price targets based on different valuation methods, including the analysis of key credit ratios and other factors describing the
securities creditworthiness, peer group analysis of securities with similar creditworthiness and different DCF-valuations. All descriptions of loan agreement structures and loan agreement features are
obtained from sources which Pareto Securities Research believes to be reliable, but Pareto Securities Research does not represent or warrant their accuracy. Be aware that investors should go through
the specific complete loan agreement before investing in any bonds and not base an investment decision based solely on information contained in this publication or report.
Pareto Securities Research has no fixed schedule for updating publications or reports.
Unless otherwise stated on the first page, the publication or report has not been reviewed by the issuer before dissemination. In instances where all or part of a report is presented to the issuer prior to
publication, the purpose is to ensure that facts are correct.
Before acting on any information in this publication or report, we recommend consulting your financial advisor.
The information contained in this publication or report does not constitute advice on the tax consequences of making any part icular investment decision. Each investor shall make his/her own appraisal of
the tax and other financial merits of his/her investment.
Sources
This publication or report may be based on or contain information, such as opinions, recommendations, estimates, price target s and valuations which emanate from Pareto Securities Research’ analysts or
representatives, publicly available information, information from other units or companies in the Group Companies, or other n amed sources.
To the extent this publication or report is based on or contains information emanating from other sources (“Other Sources”) t han Pareto Securities Research (“External Information”), Pareto Securities
Research has deemed the Other Sources to be reliable but neither the companies in the Pareto Securities Group, others associated or affiliated with said companies nor any other person, guarantee the
accuracy, adequacy or completeness of the External Information.
Ratings
Equity ratings: “Buy” Pareto Securities Research expects this financial instrument’s total return to exceed 10% over the next 1 2 months
“Hold” Pareto Securities Research expects this financial instrument’s total return to be between -10% and 10% over the next 12 months
“Sell” Pareto Securities Research expects this financial instrument’s total return to be negative by more than 10% over the next 12 months
Analysts Certification
The research analyst(s) whose name(s) appear on research reports prepared by Pareto Securities Research certify that: (i) all of the views expressed in the research report accurately reflect their personal
views about the subject security or issuer, and (ii) no part of the research analysts’ compensation was, is, or will be direc tly or indirectly related to the specific recommendations or views expressed by the
research analysts in research reports that are prepared by Pareto Securities Research.
The research analysts whose names appears on research reports prepared by Pareto Securities Research received compensation that is based upon various factors including Pareto Securities’ total
revenues, a portion of which are generated by Pareto Securities’ investment banking activities.
Limitation of liability
Pareto Securities Group or other associated and affiliated companies assume no liability as regards to any investment, divest ment or retention decision taken by the investor on the basis of this
publication or report. In no event will entities of the Pareto Securities Group or other associated and affiliated companies be liable for direct, indirect or incidental, special or consequential damages
resulting from the information in this publication or report.
Neither the information nor any opinion which may be expressed herein constitutes a solicitation by Pareto Securities Researc h of purchase or sale of any securities nor does it constitute a solicitation to
any person in any jurisdiction where solicitation would be unlawful. All information contained in this research report has been compiled from sources believed to be reliable. However, no representation
or warranty, express or implied, is made with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative.
Risk information
The risk of investing in certain financial instruments, including those mentioned in this document, is generally high, as their market value is exposed to a lot of different factors such as the operational and
financial conditions of the relevant company, growth prospects, change in interest rates, the economic and political environment, foreign exchange rates, shifts in market sentiments etc. Where an investment
or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to
the investor. Past performance is not a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. When investing in individual shares, the investor may
lose all or part of the investments.
Conflicts of interest
Companies in the Pareto Securities Group, affiliates or staff of companies in the Pareto Securities Group, may perform services for, solicit business from, make a market in, hold long or short positions in, or
otherwise be interested in the investments (including derivatives) of any company mentioned in the publication or report.
In addition Pareto Securities Group, or affiliates, may from time to time have a broking, advisory or other relationship with a company which is the subject of or referred to in the relevant Research, including
acting as that company’s official or sponsoring broker and providing investment banking or other financial services. It is t he policy of Pareto to seek to act as corporate adviser or broker to some of the
companies which are covered by Pareto Securities Research. Accordingly companies covered in any Research may be the subject o f marketing initiatives by the Investment Banking Department.
To limit possible conflicts of interest and counter the abuse of inside knowledge, the analysts of Pareto Securities Research are subject to internal rules on sound ethical conduct, the management of inside
information, handling of unpublished research material, contact with other units of the Group Companies and personal account dealing. The internal rules have been prepared in accordance with applicable
legislation and relevant industry standards. The object of the internal rules is for example to ensure that no analyst will abuse or cause others to abuse confidential information. It is the policy of Pareto
Securities Research that no link exists between revenues from capital markets activities and individual analyst remuneration. The Group Companies are members of national stockbrokers’ associations in each
of the countries in which the Group Companies have their head offices. Internal rules have been developed in accordance with recommendations issued by the stockbrokers associations. This material has
been prepared following the Pareto Securities Conflict of Interest Policy.
The guidelines in the policy include rules and measures aimed at achieving a sufficient degree of independence between variou s departments, business areas and sub-business areas within the Pareto
Securities Group in order to, as far as possible, avoid conflicts of interest from arising between such departments, business areas and sub-business areas as well as their customers. One purpose of such
measures is to restrict the flow of information between certain business areas and sub -business areas within the Pareto Securities Group, where conflicts of interest may arise and to safeguard the
impartialness of the employees. For example, the Investment Banking departments and certain other departments included in the Pareto Securities Group are surrounded by arrangements, so-called Chinese
Walls, to restrict the flows of sensitive information from such departments. The internal guidelines also include, without limitation, rules aimed at securing the impartialness of, e.g., analysts working in the
Pareto Securities Research departments, restrictions with regard to the remuneration paid to such analysts, requirements with respect to the independence of analysts from other departments within the
Pareto Securities Group rules concerning contacts with covered companies and rules concerning personal account trading carried out by analysts.
Distribution restriction
The securities referred to in this publication or report may not be eligible for sale in some jurisdictions and persons into whose possession this document comes should inform themselves about and observe
any such restrictions. This publication or report is not intended for and must not be distributed to private customers in the US, or retail clients in the United Kingdom, as defined by the Financial Conduct
Authority (FCA).
This research is only intended for and may only be distributed to institutional investors in the United States and U.S entities seeking more information about any of the issuers or securities discussed in this
report should contact Pareto Securities Inc. at 150 East 52nd Street, New York, NY 10022, Tel. 212 829 4200.
Pareto Securities Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of FINRA &SIPC. U.S. To the extent required by applicable U.S. laws and regulations,
Pareto Securities Inc. accepts responsibility for the contents of this publication. Investment products provided by or through Pareto Securities Inc. or Pareto Securities Research are not FDIC insured, may lose
value and are not guaranteed by Pareto Securities Inc. or Pareto Securities Research. Investing in non-U.S. securities may entail certain risks. This document does not constitute or form part of any offer for
sale or subscription, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The securities of non-U.S. issuers may not be registered with or
subject to SEC reporting and other requirements. The information available about non -U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and
reporting standards as U.S. companies. Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of
some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Fluctuations in the values of national currencies, as well as the potential for governmental restrictions on currency
movements, can significantly erode principal and investment returns.
Pareto Securities Research may have material conflicts of interest related to the production or distribution of this research report which, with regard to Pareto Securities Research, are disclosed herein.
Distribution in Singapore
Pareto Securities Pte Ltd holds a Capital Markets Services License is an exempt financial advisor under Financial Advisers Ac t, Chapter 110 (“FAA”) of Singapore and a subsidiary of Pareto Securities AS.
This report is directed solely to persons who qualify as "accredited investors", "expert investors" and "institutional investors" as defined in section 4A(1) Securities and Futures Act, Chapter 289 (“SFA”)
of Singapore. This report is intended for general circulation amongst such investors and does not take into account the specifi c investment objectives, financial situation or particular needs of any particular
person. You should seek advice from a financial adviser regarding the suitability of any product referred to in this report, taking into account your specific financial objectives, financial situation or particular
needs before making a commitment to purchase any such product. Please contact Pareto Securities Pte Ltd, 16 Collyer Quay, # 2 7-02 Income at Raffles, Singapore 049318, at +65 6408 9800 in matters arising
from, or in connection with this report.
Copyright
This publication or report may not be mechanically duplicated, photocopied or otherwise reproduced, in full or in part, under applicable copyright laws. Any infringement of Pareto Securities Research´s
copyright can be pursued legally whereby the infringer will be held liable for any and all losses and expenses incurred by the infringement.
Appendix A
Disclosure requirements pursuant to the Norwegian Securities Trading Regulations section 3 -10 (2) and section 3-11 (1), letters a-b
The below list shows companies where Pareto Securities AS - together with affiliated companies and/or persons – own a portion of the shares exceeding 5 % of the total share capital in any company
where a recommendation has been produced or distributed by Pareto Securities AS.
Pareto Securities AS or its affiliates own as determined in accordance with Section 13(d) of the US Exchange Act, 1 % or moreof the equity securities of :
Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by Pareto Securities AS in connection with rendering investment services,
including Market Making.
Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where arecommendation has been produced or distributed by Pareto Securities AS. "By
material interest" means holdings exceeding a value of NOK 50 000.
Appendix B
Disclosure requirements pursuant to the Norwegian Securities Trading Regulation § 3-11, letters e-f, ref the Securities Trading Act Section 3-10
Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendation, where Pareto Securities AS have been lead manager/co-lead manager
or have rendered publicly known not immaterial investment banking services over the previous 12 months:
Af rican Pet roleum Corporat ion Hunt er Group ASA Ot iga Group
Filo Mining Corp Nort hern Ocean TEMPTON Dienst leist ungen
Genel Energy
This overview is updated monthly (this overview is for the period 28.02.2019 – 29.02.2020).
Appendix C
Disclo sure requirements pursuant to the No rwegian Securities Trading Regulatio n § 3-11(4)
Buy 56%
Hold 39%
Sell 5%
Buy 87%
Hold 13%
Sell 0%
* Companies under coverage with which Pareto Securities Group has on-going or completed public investment banking services in the previous 12 months
Appendix D
This section applies to research reports prepared by Pareto Securities AB.
The Pareto Group has material holdings of other financial instruments than shares issued by the following companies included in Pareto Securities AB’s research coverage universe: None
Members of the Pareto Group provide market making or other liquidity providing services to the following companies included i n Pareto Securities AB’s research coverage universe:
Cibus Nordic Real Estate Saltängen Property Invest ShaM aran Petroleum Vostok Emerging Finance
Isofol M edical SciBase Holding
Members of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Pareto Securities AB’s research coverage universe with the following companies: None
M ember o f the P areto Gro up is pro viding B usiness M anagement services to the fo llo wing co mpanies:
Bosjö Fastigheter AB Bråviken Logistik Halmslätten M älaråsen
Bonäsudden Delarka Logistri Sydsvenska Hem
Members of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Pareto Securities AB’s research coverage universe with the following companies: None
This overview is updated monthly (last updated 17.03.2020).
Appendix E
Disclosure requirements pursuant to the Norwegian Securities Trading Regulation § 3-11, letter d, ref the Securities Trading Act Section 3-10
Designated Sponsor
Pareto Securities acts as a designated sponsor for the following companies, including the provision of bid and ask offers. Th erefore, we regularly possess shares of the company in our proprietary trading
books. Pareto Securities receives a commission from the company for the provision of the designated sponsor services.
* The designated sponsor services include a contractually agreed provision of research services.
Appendix F
Disclosure requirements pursuant to the Norwegian Securities Trading Regulation § 3-11, letter g, ref the Securities Trading Act Section 3-10
Sponsored Research
Pareto Securities has entered into an agreement with these companies about the preparation of research reports and– in return - receives compensation.