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INDUSTRY NOTE

Europe | Themes & Tactics

Europe Insights 11 May 2016

Europe InsightsStyle Series: Fresh Money GARP, Value andIncome Ideas with Strong Fundamentals

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Jefferies Int'l Ltd. Equity Research *International Analyst

+44 (0) 20 7029 8685 [email protected] Cooper, CFA, ACA *

Equity Analyst+44 (0) 20 7029 8675 [email protected]

Peter Welford, CFA *Equity Analyst

44 (0) 20 7029 8668 [email protected] Hau *

Equity Analyst+ 44 (0) 20 7029 8053 [email protected]

Kean Marden *Equity Analyst

+44 (0) 20 7029 8038 [email protected] Irvine-Fortescue *

Equity Analyst+44 (0)20 7029 8198 [email protected]

Martin Deboo *Equity Analyst

+44 (0) 20 7029 8670 [email protected] Kerstens *


Phil Dobbin *Equity Analyst

+44 (0) 20 7029 8478 [email protected] Cathcart *


Jerry Dellis *Equity Analyst

+44 (0) 20 7029 8517 [email protected] Dickerson *


Kristin Dahlberg *Equity Analyst

+44 (0) 20 7029 8122 [email protected] Salvesen *


Anthony Codling *Equity Analyst

+44 0 (20) 7029 8677 [email protected] Kirkness *


Joe Spooner *Equity Analyst

+44 (0)20 7029 8183 [email protected] Jordan *


* Jefferies International Limited

Key Takeaway

Our European analysts present 25 stocks to suit investors with different GARP,Value and Income mandates. The ideas were selected through a combinationof quant screening and fundamental stock analysis. GARP: Smith & Nephew,Shire, Ipsen, GN Store, WPP, Hays, Ryanair, Greencore, DSV, Arrow. VALUE:Aviva, Paragon, IAG, PostNL, Smurfit Kappa, Northgate. INCOME: Vodafone,Lloyds, Danske Bank, Jupiter, Red Electrica, Taylor Wimpey, Tate & Lyle, CTT andPaypoint.

An initial quant-based screen was produced to inform our stock selection process aroundpotential GARP, Value and Income investments. We combined the results of these withfundamental, single stock analysis to refine the list further and add conviction to our ideas.With strong individual equity stories in place, our analysts see good absolute upside in the25 Buy-rated names that are detailed in this report. We would make the following points onthe search criteria used within each category:

GARP Ideas: Our initial search focused on Buy-rated stocks with greater than 4%/8%consensus sales/EPS growth in each of the next two years, with positive historical EPSgrowth, trading sub 17x 1yr fwd consensus P/E. Four names were offered up from justoutside of the screen by analysts (Smith & Nephew, Shire, Ipsen and DSV). The quality offuture fundamentals led to their inclusion.

Value Ideas: Our screen isolated Buy-rated stocks with positive consensus EPS and DPSgrowth in the next two years, with a 1yr fwd consensus P/E sub 12x. We also extended thesearch to names trading below (or close to) book value. Post NL is a deep value restructuringplay that could resume (healthy) dividend payments from next year, and once again wasadded although absent from the screen.

Income Ideas: Criteria in this basket were trailing 12-month dividend yield of greater than4%, growth in consensus DPS for the next two years and JEFe DPS above consensus forthe next two years. We have added Danske Bank, where the analyst has less aggressiveDPS growth assumptions but conviction around the prospect for material share buybacks.Lloyds was also included given confidence around additional distributable capital beyondthat within our slightly more conservative DPS assumptions.

Throughout the year we will refresh our investment picks as opportunities presentthemselves.

Jefferies does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that Jefferies may have a conflictof interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 13 to 18 of this report.

Summary of Contents Page

Smith & Nephew – Chris Cooper 3

Shire – Peter Welford 3

Ipsen – Peter Welford 3

GN Store Nord – Chris Cooper 4

WPP – Lisa Hau 4

Hays – Kean Marden 5

Ryanair – Mark Irvine-Fortescue 5

Greencore – Martin Deboo 5

DSV – David Kerstens 6

Arrow Global – Phil Dobbin 6

Aviva – Mark Cathcart 7

Paragon – Phil Dobbin 7

IAG – Mark Irvine-Fortescue 7

Post NL – David Kerstens 8

Smurfit Kappa – Justin Jordan 8

Northgate – Joe Spooner 9

Vodafone – Jerry Dellis 10

Lloyds – Joe Dickerson 10

Danske Bank – Kristin Dahlberg 10

Jupiter – Phil Dobbin 11

Red Electrica – Oliver Salvesen 11

Taylor Wimpey – Anthony Codling 11

Tate & Lyle – Martin Deboo 12

CTT – David Kerstens 12

Paypoint – Will Kirkness 12

For queries or further information on this note, please contact Alex Bowden

([email protected], +44 0 20 7898 7050)

GARP Ideas

Value Ideas

Income Ideas

Themes & Tactics

Europe Insights

11 May 2016

page 2 of 18 , International Analyst, +44 (0) 20 7029 8685, [email protected] Jefferies Int'l Ltd. Equity Research

Please see important disclosure information on pages 13 - 18 of this report.

mailto:[email protected]

SMITH & NEPHEW (SN/ LN) Chris Cooper

BUY, PT: 1375p

SN/ has rebalanced away from hips/knees and now has leading positions in higher-growth segments.

Trading at a 15% sector discount, the market has overstated CJR reimbursement risk and undervalued

a 150bps uplift in organic growth atop a leaner cost base.

We forecast a strong organic growth uplift (5.0% CAGR FY16-19 vs. 3.5% FY09-15) as we factor

portfolio rebalancing towards higher-growth segments. Our Recon volume model reveals procedure

acceleration towards high single digits, while in Advanced Wound Care, pressure ulcers is

undervalued, with our AWC model driving 2%-9% sales upgrades. We also expect a further +3.6ppt

FY16 EPS tailwind from execution of two key efficiency drivers (GOP, ARTC), which in aggregate drives

a 12% EPS CAGR.

Our PT of 1,375p implies 19.8x FY17 P/E, -2% vs. sector, and is based on SOTP, corroborated by DCF,

with further upside optionality from capital deployment. Our proprietary M&A model offers a detailed

accretion/dilution analysis of a potential SYK acquisition, which could add an additional 6%-8% of

value.

SHIRE (SHP LN) Peter Welford

BUY, PT: 5150p

Robust +14% long-term EPS growth, at a minimum, aided by the successful integration of acquisitions

such as Dyax and Baxalta, plus future upside from the late-stage pipeline, underpins our positive

outlook for the stock. Given the scarcity value for high-quality growth companies in the sector, we

believe the current share price undervalues Shire.

Significant Phase II-III pipeline news could heighten confidence in Shire’s long-term organic growth

prospects, particularly the 22 July decision on approval of potential blockbuster lifitegrast, which,

along with pro-forma combined Shire-Baxalta Revenues of nearly $20bn by 2020E, should boost

belief in double-digit earnings CAGR until at least 2022E

Shire trades on 12.2x 2017 and 10.3x 2018 with +11% Sales and +14% EPS CAGR 2016-19E. This

compares with 15.6x and 14.6 for GSK and 13.7x and 12.8x for AZN in 2017E and 2018E,

respectively. We believe current levels represent a highly attractive entry point for mid/longer-term

investors willing to hold-out for 3-4 months as the dust settles on the Baxalta acquisition.

IPSEN (IPN FP) Peter Welford

BUY, PT: €63

Feedback from clinicians underpins our confidence that Somatuline should capture a significant share

of the US neuroendocrine tumour market, driving blockbuster peak sales.

Improving profitability of the US affiliate should enable significant operating leverage for an estimated

+20% EPS CAGR 2016-19E, which could yet prove overly conservative given forecast +10% sales

CAGR. Our Product Sales are 8%-14% above consensus from 2018E, mostly on a more bullish

Somatuline trajectory, for +12%-20% higher EPS forecasts, underpinning our positive investment

thesis.

Our €63 per share Price Target assumes Ipsen should trade on a 2017E PEG ratio around 1.0x, crudely

based on the current multiples for EU Biopharma Mid-cap and US biotech peers, which have typically

traded historically around 1.3x-1.6x.

Investment Thesis

Growth drivers

Valuation

Recent note: SHP

Investment Thesis

Growth drivers

Valuation

Recent note: IPN

Investment Thesis

Growth drivers

Valuation

Recent note: SN/

Themes & Tactics

Europe Insights

11 May 2016



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GN STORE NORD (GN DC) Chris Cooper

BUY, PT: DKK145

Within the Hearing Aid sector, GN continues to outperform peers (22 consecutive Q of share gains),

driven by its leading product LiNX2 and favourable approach to distribution. It is now a clear #2 in the

VA market and retains an important c.50% foothold in the high-growth Costco channel. Growth

accelerated to 11% organic in 1Q16 (second fastest ever).

The industry is entering a major launch cycle and, while WDH and SOON are due to launch 2.4GHz

devices, GN should benefit from delays in competitor sales and technology vindication. Following >2

years of building the brand as a technology leader, we believe GN has a more sustainable competitive

advantage with LiNX2 than current sentiment suggests. GN has a c.50% share in Unified

Communications (UC), a market we conservatively estimate to be worth c.$900m by 2018

(independent forecasts value it closer to $1.5bn), driving a double-digit organic CAGR for GN.

The stock trades on 13.6x FY17E for 24% EPS CAGR '15-18 (12% CAGR '16-19), a 24% discount to the

sector (13%).

WPP (WPP LN) Lisa Hau

BUY, PT: 1850p

WPP is well on track to achieve its LT growth target, supported by 1) market share gains, especially in

the US rising c.25% helped by account wins and retentions; 2) acceleration in organic revenue growth

in FY16E boosted by maxi-quadrennial events; 3) improving momentum in Continental Europe

(c.20% of net sales) and resilience in the US (c.37% of net sales); 4) favourable exposure to digital

(c.38% of revenue), which is further enhanced through acquisitions; and 5) commitment to

shareholder returns through a mix of growing dividends and share buybacks of c.€500m (2%-3% of

share outstanding) per annum.

WPP offers attractive long-term EPS growth target of 10%-15%. We see upside risks on FY16E margin

expansion (cons/JEFe c.+30bps) given 1) growing exposure to the US where margin is above group,

2) operational efficiencies delivering more effectively and 3) improvement in Kantar (c.20% of

revenue) helped by restructuring.

WPP trades on a FY17E PE and EV/EBITDA of c.14x and c.10.6x. We believe that the c.10% PE discount

to US agencies should narrow given WPP's recent market share gains.

Investment Thesis

Growth drivers

Valuation

Recent note: GN

Investment Thesis

Growth drivers

Valuation

Recent note: WPP

Themes & Tactics

Europe Insights

11 May 2016



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HAYS (HAS LN) Kean Marden

BUY, PT: 180p

Hays’ three divisions should support c10% organic revenue growth over the next few years. CEROW

has sustained strong growth with momentum in Germany and the US accelerating in recent months;

Australia has struggled back to low single digit growth and should benefit from recent interest rate

cuts; lacklustre UK trading should lift after the Brexit vote.

Hays offers a balanced TSR opportunity as the group should deliver 15%+ compound EPS growth

over the next four years and 24p in special dividends. Our estimates are in line with consensus but

assume a deterioration in UK organic revenue growth to -8% in the Brexit vote disturbed Q4 (Q3

-2%). This is likely to be conservative, particularly if the “remain” camp continues to do well in the

polls.

In our view, economic momentum will improve in H2 and, as investors’ investment horizons

lengthen, attention will revert back to peak earnings. Our fair value methodology assumes 15.5p peak

EPS, a 14.5x target PE multiple (vs 15.5x in July 2007) and discounts back to today at 10% per annum.

We then add 20p NPV of £350m special dividends between FY17E and FY19E.

RYANAIR (RYA ID) Mark Irvine-Fortescue

BUY, PT: €16.50

The investment case centres around sustaining industry-leading growth, with best-in-class balance

sheet and returns (cash ROIC approaching 20%) supporting ad hoc capital returns to shareholders.

Ryanair’s business model and customer offer is evolving positively: appealing to a broader

demographic, with more primary airports and a more digitally enabled offering. Ex-fuel unit cost

leadership and secured fleet pipeline make for a sustainable competitive advantage.

We are 5% below FY16 consensus, reflecting some caution into peak summer trading, in-line for FY17

and 10% below consensus for FY18, taking a conservative approach to net fuel benefit retention.

Our €16.50 PT is based on a 40% premium to sector 2016 EV/IC, justified by RYA's strong earnings

momentum and best-in-class margins and returns. RYA trades on 11.2x cons EPS +1yr versus 13.8x

historical average.

GREENCORE (GNC LN) Martin Deboo

BUY, PT: 420p

GNC is that rarest of jewels: a growth story in the foods space. Two-thirds of profits arise from GNC’s

leading position in the UK ‘Foods to Go’ space: fresh sandwiches & sushi for the likes of M&S, a

business growing its top line at c.8% pa.

50% of future profit growth is set to arise from a greenfield Foods to Go operation in the US, where

GNC is a lead supplier to Starbucks, for whom food is now a strategic priority. In aggregate, this is set

to drive low double-digit EPS growth over the next three years.

The stock is trading on only 17.1x on the consensus vs a recent peak of over 19x and a PEG of 1.5.

Given its growth profile and asset-light model, we think GNC should be capable of trading towards

the 20x multiples enjoyed by other solution providers such as Compass and SSP.

Investment Thesis

Growth drivers

Valuation

Recent note: HAS

Investment Thesis

Growth drivers

Valuation

Recent note: GNC

Investment Thesis

Growth drivers

Valuation

Recent note: RYA

Themes & Tactics

Europe Insights

11 May 2016



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DSV (DSV DC) David Kerstens

BUY, PT: DKK320

DSV is the best-in-class freight forwarder, with the strongest growth track record and highest, least

volatile gross margins and EBIT margins. The acquisition of UTi for $1.35bn adds 50% to revenues and

creates the world’s fourth largest freight forwarder, with a more balanced segmental and

geographical portfolio.

The UTi acquisition drives accelerating EPS growth from 10% to 15% per annum, the highest in the

European freight forwarding sector. The balance sheet remains healthy and we are projecting

leverage will fall below 1x EBITDA already next year based on strong free cash flow generation,

implying it can resume share buybacks of up to 5% of the share capital as early as next year.

DSV is attractively valued at 10.0x FY17E EV/EBIT, in line with the European freight forwarders, while

its projected earnings growth is almost double the sector average.

ARROW GLOBAL (ARW LN) Phil Dobbin

BUY, PT: 340p

Arrow is positioned to benefit from a widening distribution platform with the consolidation of debt

buyers and collectors in the UK, as well as further diversification in European operations.

We estimate that Arrow Global will have an average EPS growth rate over the next three years of

24.9%. Arrow has broadened its origination platform, via acquisition, which is benefiting ROE growth

and is allowing it to acquire portfolios off-market, which helps to protect ROE. In addition, we are

reassured by the company’s assertion that it can maintain ROE in the ‘mid twenties’, which we have

forecast at an average 28% for 2016, helped by increasingly capital light asset management revenues.

Arrow’s strong end to 2015, reflected in strong adjusted net income and a bump in dividend pay-out,

reassures us of our 2016 forecasts and PT of 340p vs. consensus PT of 338p. We believe that Arrow’s

multiple will also grow as the company becomes increasingly familiar in the UK. At 263p, it trades on

a 2016 PE of 9.6x and yields 2.7%.

Investment Thesis

Growth drivers

Valuation

Recent note: DSV

Investment Thesis

Growth drivers

Valuation

Recent note: ARW

Themes & Tactics

Europe Insights

11 May 2016



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AVIVA (AV/ LN) Mark Cathcart

BUY, PT: 523p

Aviva’s acquisition of Friends appears to be delivering on cost cuts and capital saves as successful AM

roll-out bodes well for flows. The long-awaited Investor Day on 6 July should help assuage investor

concerns that are currently focused on the sustainability of SII cash generation and ability to grow in

the core UK life market, and act as a catalyst for the stock to re-rate on the merits of the acquisition.

We believe Friends will create value given the framework of SII capital discipline and strength of the

management team to drive efficiencies and deliver growth from Aviva’s lead composite advantage.

Aviva has de-rated since its acquisition of Friends on the basis that 1) large acquisitions in the past

have usually destroyed value, 2) the UK life market is highly regulated with margin pressures limiting

earnings growth, 3) cross-sell, a premise for future UK growth at Aviva, has not worked in the past.

The stock is trading at a discount rating to the sector (conglomerate peers) at a 7.6X 2018F PER

(8.0X), and 2018F dividend yield of 6.6% (6.3%). Aviva’s forward PER has fallen back to its mid-2013

levels and five-year average where the stock traded below current levels during difficult market

conditions (Eurozone crisis) and company stress (dividend cut).

PARAGON (PAG LN) Phil Dobbin

BUY, PT: 536p

We view Paragon as our best value play in light of the company’s positioning in the private rental

sector, which remains an area of structural growth. Paragon can now benefit from both the re-gearing

of its balance sheet through a number of levers and the move to IRB, which could release more

capital.

Paragon’s Q1 operational performance has been strong despite the hit to its share price, driven by the

recent tax changes in the BTL market. While our figures remain conservative for Paragon Mortgages

and Idem, we believe that the opportunity to re-gear its balance sheet surpasses current sentiment

and yields a 40% upside to our 536p PT vs. 389p PT for 12-month consensus.

At the current share price, Paragon trades on a forward PE ratio of 7.3x and a P/BV of 0.86x.

IAG (IAG LN) Mark Irvine-Fortescue

BUY, PT: 700p

The Iberia restructuring and merger with BA looks like being a rare successful airline turnaround story.

The IAG platform enjoys network, brand and management advantages over European legacy peers,

with individual airlines competing for capital. We expect IAG to be a long-term winner from ongoing

industry consolidation.

The modest valuation does not capture the next leg of Iberia potential, nor the network benefits of the

Aer Lingus acquisition. Mid-term targets deserve to be taken seriously, and we expect IAG to gradually

grow into a higher valuation multiple as credibility builds.

IAG has enjoyed a strong upgrades cycle and near-term expectations seem well set. We estimate an

operating margin of 13.6% in 2016, growing to 14.3% in 2017, versus the mid-term target of 12%-

15%. We are 10% below consensus for FY18, taking a conservative approach to net fuel benefit

retention. Our 700p PT is based on a 10% premium to sector 2016 EV/IC, justified by IAG's strong

earnings momentum and strategic positioning. IAG trades on 5.7x cons EPS +1yr versus 14x historical

average.

Investment Thesis

Value drivers

Valuation

Recent note: IAG

Investment Thesis

Value drivers

Valuation

Recent note: AV/

Investment Thesis

Value drivers

Valuation

Recent note: PAG

Themes & Tactics

Europe Insights

11 May 2016



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POSTNL (PNL NA) David Kerstens

BUY, PT: €5.00

PostNL is a deep-value restructuring play, trading at a 44% discount to the European postal sector,

but expected to re-rate as its balance sheet recovers and it emerges as one of the most attractive yield

stocks in the sector.

The negative equity position is preventing the payment of dividends, but expected to gradually

recover to €168m by the end of next year. Furthermore, the expected sale of the 14.75% TNT Express

stake for €643m this month will result in a projected net cash position of €167m by the end of this

year, triggering improved credit ratings and paving the way for a resumption of dividend payments

next year, potentially yielding 8%, the highest in the European postal sector.

Our EPS estimates for PostNL are 5% ahead of consensus for FY16E and 10% for FY17E, as we think

the adverse regulatory impact will be relatively more limited than what is currently being indicated.

PostNL’s valuation is attractive at 4.8x FY17E EV/EBIT, implying a 44% discount to the European postal

sector, offering an equity free cash flow yield of 8.8%.

SMURFIT KAPPA (SKG ID) Justin Jordan

BUY, PT: €29

Smurfit Kappa is Europe’s largest box maker (18% market share) benefiting from retail sales growth

and structural shift to e-commerce boosting packaging demand. The company is gaining market

share via product innovation, particularly with Pan-European customers. Additionally, Smurfit Kappa

uses its FCF (8% FCF yield) to self-finance accretive M&A, consolidating the fragmented European and

Americas packaging markets.

On 5 May, Smurfit Kappa reported 2% European and 3% Americas organic box volume growth and

reaffirmed 2016 guidance of “good earnings growth in 2016”. The key sensitivity drivers for the

equity are: 1% Box Prices = €45m EBITDA, 1% Box Volume = €15m EBITDA. With robust European

demand (2% per annum) and rising OCC prices underpinning testliner pricing, we expect kraftliner

prices to stabilise.

Trading on 11.7x PE & 7.1x EV/EBITDA with 8% FCF, a 15% discount to European packaging peers,

with three near-term catalysts of 1) 1 June FTSE Index Review, 2) 3 June London Capital Markets Day

and 3) 20 June FTSE Index inclusion, we see SKG ripe for re-rating.

Investment Thesis

Value drivers

Valuation

Recent note: PNL

Investment Thesis

Value drivers

Valuation

Recent note: SKG

Themes & Tactics

Europe Insights

11 May 2016



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NORTHGATE (NTG LN) Joe Spooner

BUY, PT: 530p

Amid the complexities in the story (including accounting that blurs the picture and a mix of trends

across the group), NTG’s shares have been driven down towards the group’s adjusted tangible net

asset value (adj TNAV). But we consider de-fleeting scenarios (that realise that adj. TNAV) as a limit to

the downside from here, and see valuation risk to the upside. The dividend yield (4.5% JEF Apr ’17

forecast, 2.8x covered by EPS) provides solid compensation in the wait for a catalyst to emerge.

After marking to market the value of NTG’s fleet, we think its adj TNAV is equivalent to 372.5p per

share, and see that growing c20p+ pa from here. The shares are currently priced by the market

around that level (c1.05x adj BV). Indeed, we believe that the group’s returns outlook can justify 1.3-

1.75x. The ramp we expect in profit contributions from the new site roll-out in the UK post

investment since FY13 may provide a useful catalyst in the group narrative.

NTG’s shares have rarely sustained below 1x BV outside panic periods (the 08/09 credit crisis or 2012

market doubts over Spain), yet they hover just above those levels today. Our 530p price target

represents 1.35x our FY16F adj BV forecast.

Investment Thesis

Value drivers

Valuation

Recent note: NTG

Themes & Tactics

Europe Insights

11 May 2016




VODAFONE (VOD LN) Jerry Dellis

BUY, PT: 250p

European mobile is benefiting from supportive macro/pricing backdrops, while VOD's performance

gap is also narrowing against national incumbents. Vodafone’s margins stand to benefit from easier

comps post-Spring but also credible prospects for operating leverage in Italy and Germany. The

acquisition of Liberty Global is still needed to secure long-term prospects but a credible (value-

accretive) deal structure is now within reach, which was not the case last summer. This is VOD's

window of opportunity, in our view.

Reassurance on capex discipline post-Spring reinforces the attraction of a covered March 2017

dividend yielding 5.4%. Our forecasts are closely in line with consensus, however we see upside risk,

particularly from more aggressive cost-cutting that should drive margins up.

At our 250p PT, Vodafone would trade on a dividend yield of 4.7%/4.9% 2016/17 vs the sector on

3.3%/3.4%.

LLOYDS (LLOY LN) Joe Dickerson

BUY, PT: 108p

Clarity on regulatory capital in the UK gives confidence that management can repatriate capital down

to a 13% CET1 ratio threshold – Q4 15 distribution of both an ordinary and special dividend, which

took CET1 to 12.8%, supports our stance. We expect earnings to rise in each of ’16, ’17 and ’18,

supporting a rising ordinary dividend and prospective special distributions.

We see ordinary DPS rising to 5p by 2018. There is a prospective 7.7p of distributable capital above

our ordinary dividend expectations. Apparently, the market still questions LLOY’s ability to pay an

ordinary dividend, let alone distribute capital above and beyond this in the form of specials or share

buybacks. Thus, LLOY’s 2016E ordinary dividend yield is 6.4%, compared with an estimated sector

average yield of 4.7%.

Capital distribution is worth 20p of our Street-high price target of 108p. LLOY trades at 1.1x price/tbv,

a premium to the sector multiple of 0.9x.

DANSKE BANK (DANSKE DC) Kristin Dahlberg

BUY, PT: DKK237

Danske Bank’s unwavering earnings and tangible equity per share growth, CAGR 2015-18f 5%-6%, is

higher than Nordic large bank peers and underpinned by stabilising or improving macroeconomic,

interest rate and asset quality trends.

Fundamental strengths, regulatory stability and a 15.0% CET 1 ratio vs the 14.0% management target

should allow Danske Bank to distribute total yield of >10% including ordinary dividends and share

buybacks in 2016-17. Potential for further improvement above our base-case estimates could come

from margin expansion due to increasing interest rates and loan re-pricing in Denmark, loan provision

release given the >2x higher than sector average provisions or cost efficiency improving towards the

sector average CE/I at 45% from the FY 15 level at 51%.

We see substantial upside to our DKK237 PT as earnings stability and yield capacity remain

underappreciated. Danske Bank is trading at share price valuation 2016f 1.2x price / tangible equity

and 10x P/E.

Investment Thesis

Income drivers

Valuation

Recent note: VOD

Investment Thesis

Income drivers

Valuation

Recent note: LLOY

Investment Thesis

Income drivers

Valuation

Recent note: DANSKE

Themes & Tactics

Europe Insights

11 May 2016



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JUPITER (JUP LN) Phil Dobbin

BUY, PT: 472p

Having achieved high operating margins through its focus on UK mutual funds and equities in 2015,

Jupiter is now in the process of diversifying its fund array and distribution.

While Jupiter does not fit our model of a well-diversified manager just yet, it is well managed with

consistent flows and operational gearing. This model also yields a strong total pay-out ratio of 50%

ordinary dividend and 40% special dividend, giving JUP substantial income attraction.

We value Jupiter using a three-phase FCFE model with a 10% cost of equity, to derive a 472p PT vs. a

12-month consensus PT of 437p. Jupiter trades on a 2016 PE of 14.4x (12.5x cash adjusted), falling to

11.4x (9.8x cash adjusted) by 2018, and yields 6.2%. Its organic diversification strategy helps its

embedded value, despite its retail focus, along with a modest gross annualised redemption rate.

RED ELECTRICA (REE SM) Oliver Salvesen

BUY, PT: €84

Red Electrica offers investors regulatory visibility through to the end of 2019 and at least 7% annual

dividend growth. Historically there has been a high correlation between combined asset & dividend

growth and the share price performance of the regulated utilities. We see combined RAB and dividend

growth of 8%-10% annually through to 2019, at the top end of our regulated coverage.

The evolution of regulated capital investment is key for REE and the October 2015 publication of the

2015-2020 Spanish National Infrastructure Plan has given us increased confidence that REE will be

able to deliver the required investment to grow regulated assets and revenues. REE expects to invest

€3.1bn in electricity transmission between 2014 and 2019. Unlike its regulated peers, Red Electrica is

able to cover its dividend with operating cash flow and has a considerably de-leveraged balance sheet

at just 3.4x net debt/EBITDA. This balance sheet flexibility has allowed REE to begin to pursue an

international investment strategy without compromising the security of the dividend.

Red Electrica trades on 16.2x 2016 PE with a 4.4% dividend yield.

TAYLOR WIMPEY (TW/ LN) Anthony Codling

BUY, PT: 277p

Rock solid cashflows, with high visibility, helped by strong market fundamentals and the largest

government stimulus package (Help to Buy) the industry has ever seen.

We see material upside risk to DPS (30%-50% in CY17 and CY18), while it appears the market has not

looked at the upside to the DPS despite the highly visible cashflows. Our PT implies 50% upside to the

price of the shares, before any uplift to our DPS estimates.

TW/ is currently trading on CY16 div yield of 6.1% (20% ahead of the sector) and CY16 P/B of 1.85x

(9% ahead of sector). Historically, we have never seen this level of robustness to the cashflows, and in

our view the DPS underpins the P/B valuation at this stage in the cycle. P/B implies we are closer to

the peak than the trough; Help to Buy (out to 2021) suggests the opposite.

Investment Thesis

Income drivers

Valuation

Recent note: JUP

Investment Thesis

Income drivers

Valuation

Recent note: TW/

Investment Thesis

Income drivers

Valuation

Recent note: REE

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TATE & LYLE (TATE LN) Martin Deboo

BUY, PT: 640p

TATE is a high-yielding stock (4.8%) with a cyclical upgrade story attached. In the company’s core

business of US corn processing (80% of profits), utilisation economics are the best for years,

highlighting the opportunity to drive positive earnings surprises in 2016.

While the dividend is only 0.7x covered by free cashflow in FY17, we see this rising to 1x in FY18.

ND/EBITDA is 1.5x. We think our TATE forecasts are conservative, with realistic potential for FY17 EBIT

to be above £250m (relative to our current £219m). US peer Ingredion has recently reported 25%

profit growth in US corn processing. Our comparable forecast for TATE is only 15%. We expect

management to be more confident on their FY17 guidance at the prelims on 26 May.

Prospective 12-month PER is 16.1x, dividend yield is 4.8% and FCF yield is 3.8%. We are forecasting

12-month EPS growth of 8% and EBIT growth of 13%.

CTT (CTT PL) David Kerstens

BUY, PT: €11

CTT’s relatively resilient mail business and growing financial services offering (to 20% of revs and 35%

of EBITDA by FY20E) differentiate its growth profile from postal peers, where we estimate high single-

digit EPS growth vs. low single-digit growth for the sector.

CTT offers a sustainable dividend yield of more than 6%, the highest in the European postal sector,

and expected to grow by c5% per annum. CTT’s earnings are projected to remain relatively stable this

year and next, with underlying mid-single digit EBITDA growth largely absorbing increased Banco CTT

launch costs. Earnings growth is estimated to accelerate to >10% beyond FY17E on the back of a

growing contribution from Banco CTT, which is targeted to break-even in FY18E after shared costs.

Valuation is attractive at 8.6x FY17E EV/EBIT, in line with the European postal sector, while offering

high single-digit earnings momentum vs low single digit for the sector.

PAYPOINT (PAY LN) Will Kirkness

BUY, PT: 1100p

We continue to like the near-term shareholder returns angle and a cleaner more profitable business in

the long term. While the mobile disposal process and Collect+ renegotiation has taken longer than

expected, revenue growth from new services and Romania has been impressive.

The underlying dividend yield at PayPoint is now 5%, one of the highest in our sector (average 3%),

having consistently grown over the last 10 years, with a CAGR of 17%. We forecast PayPoint had

c£40m of net cash at the March 2016 year-end and the dividend is comfortably covered; 1.5x by EPS

and 1.4x from FCF. In addition to the core 5% dividend yield, the combined proceeds of £50m from

Mobile and Online could be considered for shareholder returns (a special dividend of up to 9%).

PayPoint is rapidly closing in on the £45m net cash target, above which surpluses are considered for

returns. In addition, we expect £14m of proceeds from the sale of the online business and an update

on the sale of the mobile business (NBV: £36m). The shares trade on 14x CY16 EPS, a discount to the

16x average multiple and modest versus a through-the-cycle range of 10-24x.

Investment Thesis

Income drivers

Valuation

Recent note: TATE

Investment Thesis

Income drivers

Valuation

Recent note: CTT

Investment Thesis

Income drivers

Valuation

Recent note: PAY

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Analyst Certification:I, Jefferies Int'l Ltd. Equity Research, certify that all of the views expressed in this research report accurately reflect my personal views about the subjectsecurity(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this research report.I, Chris Cooper, CFA, ACA, certify that all of the views expressed in this research report accurately reflect my personal views about the subjectsecurity(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this research report.I, Peter Welford, CFA, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Lisa Hau, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or viewsexpressed in this research report.I, Kean Marden, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Mark Irvine-Fortescue, certify that all of the views expressed in this research report accurately reflect my personal views about the subjectsecurity(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this research report.I, Martin Deboo, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, David Kerstens, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Phil Dobbin, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Mark Cathcart, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Jerry Dellis, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Joseph Dickerson, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Kristin Dahlberg, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Oliver Salvesen, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Anthony Codling, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Will Kirkness, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Joe Spooner, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.I, Justin Jordan, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendationsor views expressed in this research report.Registration of non-US analysts: Jefferies Int'l Ltd. Equity Research is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLCand is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm,and therefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company,public appearances and trading securities held by a research analyst.Registration of non-US analysts: Chris Cooper, CFA, ACA is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and isnot registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Peter Welford, CFA is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Lisa Hau is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore may

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11 May 2016



not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Kean Marden is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Mark Irvine-Fortescue is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and isnot registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Martin Deboo is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: David Kerstens is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Phil Dobbin is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Mark Cathcart is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Jerry Dellis is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Joseph Dickerson is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Kristin Dahlberg is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Oliver Salvesen is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Anthony Codling is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is notregistered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, andtherefore may not be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, publicappearances and trading securities held by a research analyst.Registration of non-US analysts: Will Kirkness is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Joe Spooner is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.Registration of non-US analysts: Justin Jordan is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the NASD Rule 2241 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearancesand trading securities held by a research analyst.As is the case with all Jefferies employees, the analyst(s) responsible for the coverage of the financial instruments discussed in this report receivescompensation based in part on the overall performance of the firm, including investment banking income. We seek to update our research asappropriate, but various regulations may prevent us from doing so. Aside from certain industry reports published on a periodic basis, the large majorityof reports are published at irregular intervals as appropriate in the analyst's judgement.

Company Specific DisclosuresFor Important Disclosure information on companies recommended in this report, please visit our website at https://javatar.bluematrix.com/sellside/Disclosures.action or call 212.284.2300.

Explanation of Jefferies RatingsBuy - Describes securities that we expect to provide a total return (price appreciation plus yield) of 15% or more within a 12-month period.Hold - Describes securities that we expect to provide a total return (price appreciation plus yield) of plus 15% or minus 10% within a 12-month period.

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https://javatar.bluematrix.com/sellside/Disclosures.action

https://javatar.bluematrix.com/sellside/Disclosures.action

Underperform - Describes securities that we expect to provide a total return (price appreciation plus yield) of minus 10% or less within a 12-monthperiod.The expected total return (price appreciation plus yield) for Buy rated securities with an average security price consistently below $10 is 20% or morewithin a 12-month period as these companies are typically more volatile than the overall stock market. For Hold rated securities with an averagesecurity price consistently below $10, the expected total return (price appreciation plus yield) is plus or minus 20% within a 12-month period. ForUnderperform rated securities with an average security price consistently below $10, the expected total return (price appreciation plus yield) is minus20% or less within a 12-month period.NR - The investment rating and price target have been temporarily suspended. Such suspensions are in compliance with applicable regulations and/or Jefferies policies.CS - Coverage Suspended. Jefferies has suspended coverage of this company.NC - Not covered. Jefferies does not cover this company.Restricted - Describes issuers where, in conjunction with Jefferies engagement in certain transactions, company policy or applicable securitiesregulations prohibit certain types of communications, including investment recommendations.Monitor - Describes securities whose company fundamentals and financials are being monitored, and for which no financial projections or opinionson the investment merits of the company are provided.

Valuation MethodologyJefferies' methodology for assigning ratings may include the following: market capitalization, maturity, growth/value, volatility and expected totalreturn over the next 12 months. The price targets are based on several methodologies, which may include, but are not restricted to, analyses of marketrisk, growth rate, revenue stream, discounted cash flow (DCF), EBITDA, EPS, cash flow (CF), free cash flow (FCF), EV/EBITDA, P/E, PE/growth, P/CF,P/FCF, premium (discount)/average group EV/EBITDA, premium (discount)/average group P/E, sum of the parts, net asset value, dividend returns,and return on equity (ROE) over the next 12 months.

Jefferies Franchise PicksJefferies Franchise Picks include stock selections from among the best stock ideas from our equity analysts over a 12 month period. Stock selectionis based on fundamental analysis and may take into account other factors such as analyst conviction, differentiated analysis, a favorable risk/rewardratio and investment themes that Jefferies analysts are recommending. Jefferies Franchise Picks will include only Buy rated stocks and the numbercan vary depending on analyst recommendations for inclusion. Stocks will be added as new opportunities arise and removed when the reason forinclusion changes, the stock has met its desired return, if it is no longer rated Buy and/or if it triggers a stop loss. Stocks having 120 day volatility inthe bottom quartile of S&P stocks will continue to have a 15% stop loss, and the remainder will have a 20% stop. Franchise Picks are not intendedto represent a recommended portfolio of stocks and is not sector based, but we may note where we believe a Pick falls within an investment stylesuch as growth or value.

Risks which may impede the achievement of our Price TargetThis report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, thefinancial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions basedupon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Past performance ofthe financial instruments recommended in this report should not be taken as an indication or guarantee of future results. The price, value of, andincome from, any of the financial instruments mentioned in this report can rise as well as fall and may be affected by changes in economic, financialand political factors. If a financial instrument is denominated in a currency other than the investor's home currency, a change in exchange rates mayadversely affect the price of, value of, or income derived from the financial instrument described in this report. In addition, investors in securities suchas ADRs, whose values are affected by the currency of the underlying security, effectively assume currency risk.

Other Companies Mentioned in This Report• Arrow Global (ARW LN: p265.00, BUY)• Aviva Plc (AV/ LN: p427.50, BUY)• CTT – Correios de Portugal SA (CTT PL: €8.00, BUY)• Danske Bank A/S (DANSKE DC: DKK184.40, BUY)• DSV A/S (DSV DC: DKK275.80, BUY)• GN Store Nord (GN DC: DKK129.10, BUY)• Greencore Plc (GNC LN: p376.50, BUY)• Hays (HAS LN: p130.10, BUY)• International Consolidated Airlines Group SA (IAG LN: p518.50, BUY)• Ipsen (IPN FP: €54.22, BUY)• Jupiter Fund Management (JUP LN: p416.00, BUY)• Lloyds Banking Group (LLOY LN: p65.42, BUY)• Northgate plc (NTG LN: p392.80, BUY)• Paragon Group of Companies (PAG LN: p299.80, BUY)• PayPoint (PAY LN: p835.50, BUY)• PostNL NV (PNL NA: €3.62, BUY)• Red Electrica SA (REE SM: €78.64, BUY)• Ryanair Holdings plc (RYA ID: €13.26, BUY)• Shire (SHP LN: p4,102.00, BUY)• Smith & Nephew (SN/ LN: p1,155.00, BUY)• Smurfit Kappa Group plc (SKG ID: €23.46, BUY)• Tate & Lyle (TATE LN: p610.50, BUY)• Taylor Wimpey (TW/ LN: p180.30, BUY)• Vodafone plc (VOD LN: p221.95, BUY)• WPP Group plc (WPP LN: p1,617.00, BUY)

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Distribution of RatingsIB Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY 1168 53.82% 322 27.57%HOLD 840 38.71% 162 19.29%UNDERPERFORM 162 7.47% 19 11.73%

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Other Important DisclosuresJefferies Equity Research refers to research reports produced by analysts employed by one of the following Jefferies Group LLC (“Jefferies”) groupcompanies:United States: Jefferies LLC which is an SEC registered firm and a member of FINRA.United Kingdom: Jefferies International Limited, which is authorized and regulated by the Financial Conduct Authority; registered in England andWales No. 1978621; registered office: Vintners Place, 68 Upper Thames Street, London EC4V 3BJ; telephone +44 (0)20 7029 8000; facsimile +44 (0)207029 8010.Hong Kong: Jefferies Hong Kong Limited, which is licensed by the Securities and Futures Commission of Hong Kong with CE number ATS546; locatedat Suite 2201, 22nd Floor, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong.Singapore: Jefferies Singapore Limited, which is licensed by the Monetary Authority of Singapore; located at 80 Raffles Place #15-20, UOB Plaza 2,Singapore 048624, telephone: +65 6551 3950.Japan: Jefferies (Japan) Limited, Tokyo Branch, which is a securities company registered by the Financial Services Agency of Japan and is a memberof the Japan Securities Dealers Association; located at Hibiya Marine Bldg, 3F, 1-5-1 Yuraku-cho, Chiyoda-ku, Tokyo 100-0006; telephone +813 52516100; facsimile +813 5251 6101.India: Jefferies India Private Limited (CIN - U74140MH2007PTC200509), which is licensed by the Securities and Exchange Board of India as a MerchantBanker (INM000011443), Research Analyst (INH000000701) and a Stock Broker with Bombay Stock Exchange Limited (INB011491033) and NationalStock Exchange of India Limited (INB231491037) in the Capital Market Segment; located at 42/43, 2 North Avenue, Maker Maxity, Bandra-KurlaComplex, Bandra (East) Mumbai 400 051, India; Tel +91 22 4356 6000.This material has been prepared by Jefferies employing appropriate expertise, and in the belief that it is fair and not misleading. The information setforth herein was obtained from sources believed to be reliable, but has not been independently verified by Jefferies. Therefore, except for any obligationunder applicable rules we do not guarantee its accuracy. Additional and supporting information is available upon request. Unless prohibited by theprovisions of Regulation S of the U.S. Securities Act of 1933, this material is distributed in the United States ("US"), by Jefferies LLC, a US-registeredbroker-dealer, which accepts responsibility for its contents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of1934. Transactions by or on behalf of any US person may only be effected through Jefferies LLC. 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