LatAm Food and Beverages

Nutresa
Global Equity Research NUTRESA-CN: COP 52,790 Target: COP 28,000 Rating: Sector Perform

Daily Edge | Pre-market

Thursday, November 3, 2022 An Updated Model and Some Ownership Facts

Analyst Team Link to ScotiaView

OUR TAKE: Mixed. We are updating our numbers to reflect recent results, which have
 
significantly exceeded consensus expectations, to update the impact of the Russia/Ukraine
Felipe Ucros | Analyst
Scotia Capital (USA) Inc. | 212-225-5098
conflict on commodities and margins, and to incorporate the higher likelihood of an economic
 
slowdown in 2023. But first, we clarify some references from a recent report.
Juan Jose Guzman, MSc | Associate
Scotiabank Perú SAA | 511-211-6851
KEY POINTS
Pertinent Data
Rating Sector Perform References: In a recent report, we referred to the offeror from OPA’s #1, #2, and #3, and the
1-Yr. Target COP 28,000
offeror from OPA #4 as a group. Legally, these two offerors are different entities with different
NUTRESA-CN COP 52,790
controllers. Please see Exhibits 1 to 3.
1-Yr. Return -45.5%
Div. (NTM) $796.81
Div. (Curr.) $833.48 New Model: We are updating our model, to reflect YTD results that significantly exceeded
Yield (Curr.) 1.6% consensus expectations, a more prolonged commodity inflation spike, and the impact of
 
Valuation: Explicit 10-Year DCF @ 11.0% commodity inflation on Nutresa’s margins.
Pertinent Revisions
New Old For 2023, we are now modelling a mild recession across LatAm, where volume growth drops
EPS22E $1,940.89 $1,510.57 to the low single-digits (in line with MDB and Gruma, the lowest volume assumptions in our
EPS23E $2,144.01 $1,726.66 food coverage) and where carry-over from pricing implemented in 2022 becomes the main
 
 

Capitalization driver for top-line growth. A summary income statement is included in Exhibit 8.
Market Cap. (M) US$4,825
Enterprise Value (B) $28,295 Valuation: A valuation based on the most recent tender (US$ 15) and on consensus, which
Shares O/S (M) 458 includes our most updated numbers, is detailed in Exhibit 4. That would imply an ~18x 2023E
Float O/S (M) 251
EV/EBITDA. However, we caution readers on two fronts.

First, most models in consensus are outdated (most are more than 6 months old) and miss
the strong YTD performance. To emphasize the importance of this, the oldest model in the
consensus implies negative EBITDA for Nutresa in 4Q22 and the second oldest one implies a
q/q drop in EBITDA of 84% for 4Q22.

Second, due to recent events, we believe shares are now trading at multiples that reflect
tender offers and the implicit control premiums for multiple companies, rather than historical
trading multiples or DCF assumptions.

Fair Value: As a reminder, our LatAm food sector has historically traded at EV/EBITDA
multiples of ~9x. Transaction control premiums for food companies have hovered circa
40-50% over the last few years in LatAm. Therefore, we consider ~13x NTM EBITDA to be fair
multiples for a change in control premium for a food company.

Valuation Changes and Sensitivity: In Exhibit 5, we also detail how valuations have changed
since the tender processes started, once more, based on consensus. [Continues on page 2]
Qtly EPS  (Basic)   Q1 Q2 Q3 Q4 Year P/EPS
2020A $413.57 $300.96 $305.77 $230.32 $1,250.62 19.2x
2021A $498.89 $298.09 $367.60 $309.99 $1,478.69 19.4x
2022E $645.45A $453.80A $480.30A $361.34 $1,940.89 27.2x
2023E $497.28 $447.85 $586.52 $612.36 $2,144.01 24.6x

(FY-Dec.) 2020A 2021A 2022E 2023E

Volume and Closing Price for NUTRESA-CN
Revenues (M) $11,127,541 $12,738,271 $16,777,122 $18,681,667
5 70k
EBITDA (M) $1,443,576 $1,532,391 $1,981,551 $2,266,266
4 60k EBITDA Margin 13.0% 12.0% 11.8% 12.1%
Return on Equity 9.2% 10.3% 12.1% 12.4%
3 50k
Vol (M)

Historical price multiple calculations use FYE prices. All values in COP unless otherwise indicated.
Price

2 40k Source: FactSet; company reports; Scotiabank GBM estimates.

1 30k Production: November 3, 2022, 02:01 ET. Dissemination: November 3, 2022, 06:12 ET.
0
Jan-22 Mar-22 May-22 Jul-22
20k
Sep-22 Nov-22
For Reg AC Certification and important disclosures see Appendix A of this report. Analysts
Volume NUTRESA-CN employed by non-U.S. affiliates are not registered/qualified as research analysts with
Source: FactSet. FINRA in the U.S. unless otherwise noted within this report.
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Key
  to these changes over time are two variables: cross-holding portfolio value and expected 2023E
EBITDA. We have provided sensitivity tables in Exhibits 6 and 7 that look at how this valuation changes
based on assumptions about FX (since the offer is in USD), portfolio value (we use reported end-of-
quarter market prices), and 2023E EBITDA.

As always, we are available for calls and our model is available upon request.

Exhibit 1 - Nugil SAS Ownership Structure

Nugil S.A.S. - Offering Vehicle - Offers 1-3

Royal Group
UAE 1
Unknown

Jaime Gilinski Aflaj Investment

Bacal 1 LLC 1
50.01% 49.99%

Nugil Overseas S.A. (Panama)

100.00%

Nugil SAS (Colombia)

Offering Vehicle

Guarantee: First Abu Dhabi Bank

Royal Group Chairman: Sheikh Tahnoon Bin Zayed Al Nahyan 2
Note:
1. This society is part of Royal Group UAE companies (p.4 of November 2021 Nugil SAS Tender Offer Prospectus: https://
www.bvc.com.co/recursos/emisores/Prospectos/Acciones/Cuadernillo_de_OPA_Nutresa_Final.pdf)
2. https://royalgroupuae.com/about-us.html

Source: Company reports; Bolsa de Valores de Colombia; Scotiabank GBM.

 
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Exhibit
  2 - IHC Capital Holding LLC Ownership Structure

IHC Capital Holding LLC - Offering Vehicle - Offer 4

100.00%
Royal Group PAL Group of Other Regional Foreigners
UAE 1 Companies LLC 2 Entities
15.22% 58.52% 25.92% 0.34%

IHC Holding Company PJSC

Publicly Traded

0.01% 100.00%
IHC Companies 99.99% IHC Holding RSC
Management LLC 3 Ltd. 3
99.99% 0.01%

IHC Capital Holding 3

LLC
Offering Vehicle

Guarantee: First Abu Dhabi Bank

Royal Group Chairman: Sheikh Tahnoon Bin Zayed Al Nahyan 4
Note:
1. Ownership via investment vehicle (Royal Group for Corporate Management LLC) according to official filings.
(p.204 of International Holding Company PJSC (IHC) 2021 Annual Integrated Report: https://www.ihcuae.com/
investor-relations/pdf/IHC-Integrated-Report-2021-English.pdf and Abu Dhabi Securities Exchange:
https://www.adx.ae/english/pages/productsandservices/securities/selectcompany/company-info.aspx?
listedcompanyid=AEI000201014&pnavTitle=International%20Holding%20Company%20PJSC).
2. PAL Group of Companies is a wholly owned subsidiary of Royal Group UAE according to its website (https://
www.palgroup.com/).
3. p.9 of October 2022 IHC Capital Holding LLC Tender Offer Prospectus (https://www.bvc.com.co/recursos/emisores/
Prospectos/Acciones/Anexo_2_IHC_OPA_Nutresa_Cuadernillo_Final.pdf)
4. https://royalgroupuae.com/about-us.html

Source: Company reports, Bolsa de Valores de Colombia; Scotiabank GBM.

 
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Exhibit
  3 - First Abu Dhabi Bank PJSC Ownership Structure

First Abu Dhabi Bank PJSC (FAB) - Financial Guarantor

Mubadala Investment Abu Dhabi Other UAE

Company (MIC) Ruling Family Entities Foreigners
37.90% 15.50% 28.40% 18.30%

First Abu Dhabi Bank PJSC (FAB)

Publicly Traded

FAB Chairman: Sheikh Tahnoon Bin Zayed Al Nahyan 1

MIC Chairman: Sheikh Mohamed bin Zayed Al Nahyan (MBZ) 2
FAB AD Family: Each member has less than 5% 3
Note:
1. https://www.bankfab.com/en-ae/about-fab/group/board-of-directors
2. https://www.mubadala.com/en/who-we-are/board-of-directors
3. Slide 11 of FAB's September 2022 Investor Presentation (https://www.bankfab.com/-/media/fabgroup/home/about-fab/
investor-relations/pdfs/september-2022-investor-presentation.pdf?view=1)

Source: Company reports (FAB's September 2022 Investor Presentation); Scotiabank GBM.

Exhibit 4 - Consensus Implied Valuation of Latest Tender Offer

Last EBITDA 2022e 2023e
Update EBITDA EBITDA

Scotia Update 1,980 2,266

Consensus Brokers
BTG Jul-2022 1,882 2,037
Larrain Mar-2022 1,566 1,763
Credicorp Sep-2021 1,567 1,686
Itau Jul-2021 1,448 1,572

Consensus EBITDA 1,689 1,865

% of our estimate 85% 82%
Current Offer EV $33,088
Scotia Food-Only Multiple 17x 15x
Consensus Multiple 20x 18x

Source: FactSet Consensus Data; Scotiabank GBM estimates.

 
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Exhibit
  5 - Tender Offers for Nutresa - Change of Valuations Over Time
Nutresa Pre-Tender Tender 1 Tender 4 T4/T1
Nov-2021 Nov-2021 Nov-2022 % Change

1
Share (offer) price $21,381 $30,791 $70,047 127%
Shares Outstanding 460 460 460
Mkt Cap $9,837,927 $14,167,680 $32,230,199

Net Debt $3,428,067 $3,428,067 $4,036,337

Min. Int. $73,277 $73,277 $93,233
2
Portfolio ($2,271,028) ($2,271,028) ($3,271,342) 44%
Food EV $11,068,243 $15,397,996 $33,088,427

3
Consensus FY+1 EBITDA $1,612,990 $1,612,990 $1,864,800 16%

Food-Only Valuation
Consensus EV/FY+1 EBITDA 6.9x 9.5x 17.7x 86%

Note:
1. Pre-Tender Share Price: Uses the share price prior to the announcement of the first tender offer made by Nugil SAS.
Tender 1: Uses the compliance FX rate as of the offer settlement date. Current offer ('Tender 4'): Uses the average FX since
IHC's offer was announced.
2. Uses the latest Nutresa portfolio marks, which in turn use market prices as of the end of the last reported quarter.
3. Uses next fiscal year FactSet Consensus EBITDA (including Scotia Update).

Source: Company reports; FactSet Consensus Data; Bolsa de Valores de Colombia; Scotiabank GBM estimates.

Exhibit 6 - Tender Offer Implied Valuation Sensitivity Analysis - FX Exhibit 7 - Tender Offer Implied Valuation Sensitivity Analysis -
Exchange Rate vs. 2023E EBITDA Cross-holdings Porfolio Value vs. 2023E EBITDA

EBITDA 2023E EBITDA 2023E

18x $1,750 $2,000 $2,250 $2,500 18x $1,750 $2,000 $2,250 $2,500
$4,600 18.6x 16.3x 14.5x 13.0x $2,000 19.6x 17.2x 15.3x 13.7x
FX (USD/COP)

Portfolio

$4,700 19.0x 16.6x 14.8x 13.3x $3,000 19.1x 16.7x 14.8x 13.3x
Value

$4,800 19.4x 17.0x 15.1x 13.6x $4,000 18.5x 16.2x 14.4x 12.9x
$4,900 19.8x 17.3x 15.4x 13.9x $5,000 17.9x 15.7x 13.9x 12.5x
$5,000 20.2x 17.7x 15.7x 14.1x $6,000 17.3x 15.2x 13.5x 12.1x

Source: FactSet Consenus Data; Scotiabank GBM estimates. Source: FactSet Consensus Data; Scotiabank GBM estimates.

 
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Exhibit
  8 - Nutresa - Income Statement Summary
Nutresa
Income Statement
(in COP$ million)
2017 2018 2019 2020 2021 Q1-22 Q2-22 Q3-22 Q4-22E 2022E Q1-23E Q2-23E Q3-23E Q4-23E 2023E

Cold cuts 1,824,182 1,849,753 1,912,022 2,145,265 2,356,299 654,138 691,403 724,558 756,002 2,826,100 708,783 738,888 732,402 776,268 2,956,341
Biscuits 1,768,435 1,823,381 2,029,125 2,223,679 2,248,701 640,690 709,318 841,124 833,789 3,024,921 786,748 792,358 858,905 873,264 3,311,275
Chocolate 1,463,734 1,552,791 1,676,711 1,737,201 1,964,873 530,055 569,796 680,219 723,026 2,503,095 631,936 648,871 716,568 758,230 2,755,605
Coffee 1,001,950 985,657 1,210,085 1,591,087 1,882,553 577,347 689,808 839,580 796,602 2,903,335 760,641 839,430 893,103 843,568 3,336,743
Tresmontes 978,246 994,596 1,041,956 1,117,290 1,202,610 323,872 397,211 407,222 395,389 1,523,694 393,799 454,339 435,440 441,749 1,725,328
Ice cream 423,460 444,361 475,583 482,535 575,308 158,196 164,983 186,978 188,042 698,200 178,964 186,833 198,898 199,129 763,825
Pasta 293,596 301,991 343,012 404,555 426,461 125,597 139,285 153,912 149,856 568,650 135,174 145,517 161,729 157,705 600,125
Food Service 696,955 737,717 814,636 660,356 964,040 254,833 285,535 313,651 277,939 1,131,958 280,129 304,292 329,154 289,225 1,202,799
Other 245,046 325,819 455,721 765,573 1,117,425 332,715 366,841 397,926 499,686 1,597,167 422,264 471,089 505,396 630,877 2,029,625
Revenue 8,695,604 9,016,067 9,958,851 11,127,541 12,738,271 3,597,442 4,014,178 4,545,170 4,620,331 16,777,122 4,298,439 4,581,616 4,831,595 4,970,016 18,681,667
Growth (y/y) 0% 4% 10% 12% 14% 27% 36% 35% 28% 32% 19% 14% 6% 8% 11%
COGS 4,855,635 4,969,218 5,565,300 6,465,128 7,610,884 2,223,204 2,540,946 2,905,539 2,933,910 10,603,599 2,729,509 2,886,418 2,995,589 3,031,710 11,643,226
Gross Profit 3,839,969 4,046,849 4,393,551 4,662,413 5,127,387 1,374,238 1,473,232 1,639,631 1,686,421 6,173,522 1,568,930 1,695,198 1,836,006 1,938,306 7,038,441
Gross Margin 44.2% 44.9% 44.1% 41.9% 40.3% 38.2% 36.7% 36.1% 36.5% 36.8% 36.5% 37.0% 38.0% 39.0% 37.7%
- SG&A expenses 3,090,808 3,204,094 3,460,096 3,655,267 4,059,228 1,023,975 1,118,177 1,239,787 1,324,445 4,706,384 1,217,368 1,288,500 1,351,677 1,437,716 5,295,261
% of sales 35.5% 35.5% 34.7% 32.8% 31.9% 28.5% 27.9% 27.3% 28.7% 28.1% 28.3% 28.1% 28.0% 28.9% 28.3%
- Other operating expenses (income) (25,364) (6,542) (26,166) (12,442) (37,138) (22,327) (1,211) (15,879) (13,861) (53,278) (4,298) (4,582) (4,832) (4,970) (18,682)
EBIT 774,525 849,297 959,621 1,019,588 1,105,297 372,590 356,266 415,723 375,837 1,520,416 355,861 411,280 489,160 505,561 1,761,861
EBIT Margin 8.9% 9.4% 9.6% 9.2% 8.7% 10.4% 8.9% 9.1% 8.1% 9.1% 8.3% 9.0% 10.1% 10.2% 9.4%
- Net Financial and other (expenses) (251,338) (145,081) (224,507) (204,255) (117,780) 17,469 (43,202) (86,569) (116,822) (229,124) (23,301) (110,557) (97,333) (96,598) (327,789)
Pretax Income 523,187 704,216 735,114 815,333 987,517 390,059 313,064 329,154 259,014 1,291,292 332,560 300,722 391,828 408,963 1,434,073
- Income Tax Expense 97,777 189,324 205,221 230,936 263,056 88,833 98,648 104,193 88,065 379,739 99,768 90,217 117,548 122,689 430,222
Effective Tax Rate 19% 27% 28% 28% 27% 23% 32% 32% 34% 29% 30% 30% 30% 30% 30%
Net Income from Con't Ops 425,410 514,892 529,893 584,397 724,461 301,226 214,416 224,961 170,950 911,553 232,792 210,506 274,279 286,274 1,003,851
Discontinued Ops (1,070) (6,135) (16,452) (553) (31,207) (10) (9) (2) 0 (21) 0 0 0 0 0
Net Income 424,340 508,757 513,441 583,844 693,254 301,216 214,407 224,959 170,950 911,532 232,792 210,506 274,279 286,274 1,003,851
Net Margin 4.9% 5.6% 5.2% 5.2% 5.4% 8.4% 5.3% 4.9% 3.7% 5.4% 5.4% 4.6% 5.7% 5.8% 5.4%
EBITDA Calculation
EBIT 774,525 849,297 959,621 1,019,588 1,105,297 372,590 356,266 415,723 375,837 1,520,416 355,861 411,280 489,160 505,561 1,761,861
D&A 269,654 275,494 387,608 423,988 427,094 95,536 125,588 115,262 124,749 461,135 116,058 123,704 130,453 134,190 504,405
EBITDA 1,044,179 1,124,791 1,347,229 1,443,576 1,532,391 468,126 481,854 530,985 500,586 1,981,551 471,919 534,983 619,614 639,751 2,266,266
EBITDA Margin 12.0% 12.5% 13.5% 13.0% 12.0% 13.0% 12.0% 11.7% 10.8% 11.8% 11.0% 11.7% 12.8% 12.9% 12.1%
Growth y/y 1% 8% 20% 7% 6% 18% 37% 24% 41% 29% 1% 11% 17% 28% 14%

Note: Historical values appear as reported (i.e., not restated).

Source: Company reports; Scotiabank GBM estimates.

 
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Company Overview Thursday, November 3, 2022

 
Company Description

Nutresa is a leading Latin American manufacturer and distributor of branded consumer food products.
Founded in 1920 in Colombia, where it evolved through a solid combination of organic growth and a
successful acquisition strategy, it manages more than 168 brands, 17 of which generate annual sales of
US$50 million each. While Nutresa’s products can be found in nearly 72 countries around the world,
the company mainly generates revenue through eight business segments distributed in the 14 countries
where it operates its 45 manufacturing plants.

Key Risks

Economic, raw materials, foreign exchange, political and geographic, regulatory, interest rate, M&A,
corporate governance.

 
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  Appendix A: Important Disclosures

Company Disclosures (see legend below)*

M. Dias Branco V0178, VS0687

I, Felipe Ucros, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately reflect my
personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific recommendations or views
expressed by me in this report.

This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova Scotia,
its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and Markets"
is the marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova Scotia and its
affiliates. Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred to as "globally
branded research" under U.S. rules. This research is produced on a single global research platform with one set of rules which meet the
most stringent standards set by regulators in the various jurisdictions in which the research reports are produced. In addition, the Research
Analysts who produce the research reports, regardless of location, are subject to one set of policies designed to meet the most stringent
rules established by regulators in the various jurisdictions where the research reports are produced.

Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas within
Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to prevent
research independence being compromised by any interactions they may have with other business areas of The Bank of Nova Scotia. The
compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research Management and
senior management (not including investment or corporate banking).

Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to the
revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank Research will
initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research has independent
supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank.

For Scotiabank, Global Banking and Markets Research Analyst Standards and Disclosure Policies, please visit www.gbm.scotiabank.com/
disclosures.

For additional questions, please contact Scotiabank, Global Banking and Markets Research, 4 King St W, 12th Flr, Toronto, Ontario, M5H 1A1.

Time of dissemination: November 3, 2022, 06:12 ET. Time of production: November 3, 2022, 02:01 ET. Note: Time of dissemination is defined
as the time at which the document was disseminated to clients. Time of production is defined as the time at which the Supervisory Analyst
approved the document.

*Legend
V0178 Scotiabank Brasil S.A. Banco Multiplo is acting as financial advisor to M. Dias Branco SA in the announced agreement to acquire
privately owned Latinex Importacao E Exportacao De Alimentos SA.
VS0687 Research Associate Juan Guzman visited M. Dias Branco's Piraquê production plant in Rio de Janeiro on December 5, 2018. The
issuer did not pay for any of the travel-related expenses incurred by the Research Associate to visit this site.

 
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  Rating and Price Target History

Nutresa (NUTRESA-CN) as of November 02, 2022 (in COP)

02-24-2020 04-27-2020 08-03-2021 11-12-2021 02-28-2022
Price: 25,300.00 Price: 23,200.00 Price: 20,350.00 Price: 21,740.00 Price: 44,220.00
Rating: SO Rating: SO Rating: SP Rating: SO Rating: SP
Target: 33,000.00 Target: 30,000.00 Target: 28,000.00 Target: 28,000.00 Target: 28,000.00
70,000

60,000

50,000

Price (COP)
40,000

30,000

20,000

10,000
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23

*Represents the value(s) that changed.

Ratings Legend: FS=Focus Stock; SO=Sector Outperform; SP=Sector Perform; SU=Sector Underperform; T=Tender; UR=Under Review; CS=Coverage Suspended; DC=Discontinued Coverage
Source: Scotiabank GBM estimates; FactSet.

 
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  Definition of Scotiabank, Global Banking and Markets Equity Research Ratings

Scotiabank has a three-tiered rating system, with ratings of Sector Outperform, Sector Perform, and Sector Underperform. Each Research
Analyst assigns a rating that is relative to his or her coverage universe or an index identified by the Research Analyst that includes, but is not
limited to, stocks covered by the Research Analyst.

The rating assigned to each security covered in this report is based on the Scotiabank, Global Banking and Markets Research Analyst’s 12-
month view on the security. Research Analysts may sometimes express in research reports shorter-term views on these securities that may
impact the price of the equity security in a manner directly counter to the Research Analyst’s 12-month view. These shorter-term views
are based upon catalysts or events that may have a shorter-term impact on the market price of the equity securities discussed in research
reports, including but not limited to the inherent volatility of the marketplace. Any such shorter-term views expressed in research report are
distinct from and do not affect the Research Analyst’s 12-month view and are clearly noted as such.

Ratings
 
 

Sector Outperform (SO) Other Ratings

The stock is expected to outperform the average 12-month total
return of the analyst’s coverage universe or an index identified by Under Review – The rating has been temporarily placed under
the analyst that includes, but is not limited to, stocks covered by the review, until sufficient information has been received and assessed
analyst. by the analyst.

Sector Perform (SP) Tender – As of January 25, 2021, Scotiabank GBM discontinued the
Tender rating.
The stock is expected to perform approximately in line with the
average 12-month total return of the analyst’s coverage universe or Risk Ranking
an index identified by the analyst that includes, but is not limited to,
The Speculative risk ranking reflects exceptionally high financial
stocks covered by the analyst.
and/or operational risk, exceptionally low predictability of financial
Sector Underperform (SU) results, and exceptionally high stock volatility. The Director of
Research and the Supervisory Analyst jointly make the final
The stock is expected to underperform the average 12-month total
determination of the Speculative risk ranking.
return of the analyst’s coverage universe or an index identified by
the analyst that includes, but is not limited to, stocks covered by the
analyst.

Focus Stock (FS)

As of April 29, 2019, Scotiabank GBM discontinued the Focus
Stock rating. A stock assigned this rating represented an analyst’s
best idea(s); stocks in this category were expected to significantly
outperform the average 12-month total return of the analyst’s
coverage universe or an index identified by the analyst that
included, but was not limited to, stocks covered by the analyst.

Ratings Distribution
As of October 31, 2022
  Companies Rated Investment Banking Service Provided
in Each Category in the Last 12 Months
Rating Count Percentage Count Percentage
Sector Outperform 265 51% 72 27%
Sector Perform 240 46% 62 26%
Sector Underperform 18 3% 1 6%

For the purposes of the ratings distribution disclosure FINRA requires members who use a ratings system with terms different than
“buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our Sector Outperform, Sector Perform, and Sector
Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral and sell ratings, respectively.

 
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  General Disclosures
This document is for distribution only as may be permitted by law. It is not directed to, or intended for distribution to or use by, any person
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No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information
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Any opinions expressed in this document may change without notice and may differ or be contrary to opinions expressed by other business
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Equity
  research reports published by Scotiabank are initially and simultaneously made available electronically to intended recipients through
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 Additional Disclosures

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Bank ADI) holding an Australian Financial Services License (AFSL).

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material,
  please contact BNS Asia Limited, located at 1 Raffles Quay, #20-01 North Tower, One Raffles Quay, Singapore 048583, telephone:
+65 6305 8388.

This document is intended for general circulation only and any recommendation that may be contained in this document concerning an
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into account the specific investment objectives, financial situation, or particular needs of any person in receipt of the recommendation,
before the person makes a commitment to purchase the investment product.

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Limited and/or its affiliates in such circumstances may be different from or contrary to the discussion set out in this report.

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