External broker reports(aggregated public sources), International Securities

International Securities

External broker reports(aggregated public sources)

International Securities’ equity research analysis and advisory have been a vital source of market intelligence for our distinguished clients over the years. The equity research team’s main objective is to cover listed equities and to provide thoughtful, insightful, differentiated and timely research that can help clients make informed decisions. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>ADNOC Distribution posted 3Q24 core attributable profit (adjusted for inventory gains and forex gains/losses) of AED595mn, down 2% YoY (+10 QoQ)</li><li>On reported basis, attributable profit came in 7% higher YoY at AED667mn</li><li>The marginal decline in YoY core profits is led mainly due to corporate taxes as the company booked a tax expense of AED74mn in 3Q24 versus AED11mn in 3Q23</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ADNOC Distribution posted 3Q24 core attributable profit (adjusted for inventory gains and forex gains/losses) of AED595mn, down 2% YoY (+10 QoQ)On reported basis, attributable profit came in 7% higher YoY at AED667mnThe marginal decline in YoY core profits is led mainly due to corporate taxes as the company booked a tax expense of AED74mn in 3Q24 versus AED11mn in 3Q23Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ADNOC Distribution Result Review: 3Q24 Core Profit Down 2% YoY (+10% QoQ) To AED595mn

<ul><li>ADNOC Distribution posted 2Q24 core attributable profit (adjusted for inventory gains and forex losses) of AED486mn, up 2% YoY (flat QoQ), in line with our estimates</li><li>On reported basis, attributable profit came in 15% higher YoY at AED979mn</li><li>Retail volumes clocked in at 2,481mn liters in 2Q24, lower by 2% QoQ owing to impact of poor weather and floods in UAE</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ADNOC Distribution posted 2Q24 core attributable profit (adjusted for inventory gains and forex losses) of AED486mn, up 2% YoY (flat QoQ), in line with our estimatesOn reported basis, attributable profit came in 15% higher YoY at AED979mnRetail volumes clocked in at 2,481mn liters in 2Q24, lower by 2% QoQ owing to impact of poor weather and floods in UAEContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ADNOC Distribution - 2Q24 Core Profit up 2% YoY (Flat QoQ) To AED486mn

Thematic (Sector/Industry)

<ul><li>We expect ADNOC Drilling to post 3Q24e shareholder’s profit of USD311mn, up 21% YoY and 6% QoQ.</li><li>We expect total rig count to increase to 143 rigs, up from 140 rigs in 2Q24 and 124 rigs in 3Q23.</li><li>On YoY basis, we expect revenue to increase by 26% to USD976mn, led by higher number of rigs and continued expected growth in the Oil Field Services (OFS) business.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We expect ADNOC Drilling to post 3Q24e shareholder’s profit of USD311mn, up 21% YoY and 6% QoQ.We expect total rig count to increase to 143 rigs, up from 140 rigs in 2Q24 and 124 rigs in 3Q23.On YoY basis, we expect revenue to increase by 26% to USD976mn, led by higher number of rigs and continued expected growth in the Oil Field Services (OFS) business.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

3Q24 Quarterly Previews for IS Coverage Universe

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 24 June, <a href="https://www.smartkarma.com/entities/covestro-ag" target="_blank" data-smartkarma-citation="entities:21574:1" rel="noopener">Covestro AG (1COV GR)</a> confirmed it has decided to enter into concrete negotiations with ADNOC regarding a potential transaction at an indicative €62/share (9.6x EV/fwd NTM EBITDA).</li>
<li>Covestro is trading at 8x (vs. 6.5x median of peers). To justify €70/share (sought last December), Covestro should overdeliver, but analysts and market are somehow skeptical about that.</li>
<li>Considering a takeout price of €62, gross spread is 12.1% and the shares are pricing a 32.5% probability of deal completion.</li>
</ul>


On 24 June, Covestro AG (1COV GR) confirmed it has decided to enter into concrete negotiations with ADNOC regarding a potential transaction at an indicative €62/share (9.6x EV/fwd NTM EBITDA).
Covestro is trading at 8x (vs. 6.5x median of peers). To justify €70/share (sought last December), Covestro should overdeliver, but analysts and market are somehow skeptical about that.
Considering a takeout price of €62, gross spread is 12.1% and the shares are pricing a 32.5% probability of deal completion.


Adnoc/Covestro: Fresh Takeover Negotiations and Valuation Scenarios

Providing investors with a balanced perspective, Massif Capital

Massif Capital Research

Providing investors with a balanced perspective

Massif Capital

Research focused on providing investors with a balanced perspective on the environmental and economic realities of achieving a carbon-neutral economy for businesses within the Energy, Basic Materials and Industrial industries.

The Massif Capital Real Asset Strategy is a global long/short equity strategy built around bottom-up stock picking. We are focused on creating a portfolio of businesses from within the Energy, Basic Materials and Industrial sectors that balance the environmental and economic realities of achieving a carbon-neutral economy.

Macroeconomics

<div><ul style="list-style-type: disc;"><li>Outperformance of Metals and Mining sector: The fund's gold, copper, and lithium investments outperformed their respective industry performance.</li><li>Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.</li><li>The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.</li></ul></div>

Outperformance of Metals and Mining sector: The fund's gold, copper, and lithium investments outperformed their respective industry performance.Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.

United Arab Emirates

Abu Dhabi National Oil Company for Distribution PJSC markets and distributes petroleum products. The Company offers lubricants, liquid propane, greases, and natural gas for vehicles, as well as provides service stations for refueling, oil change, parts replacement, and car washing services. Abu Dhabi National Oil Company for Distribution serves customers worldwide.

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ADNOC Distribution (ADNOCDIS UH)

ADNOC Distribution Result Review: 3Q24 Core Profit Down 2% YoY (+10% QoQ) To AED595mn

ADNOC Distribution posted 3Q24 core attributable profit (adjusted for inventory gains and forex gains/losses) of AED595mn, down 2% YoY (+10 QoQ)

International Securities

ADNOC Distribution - 2Q24 Core Profit up 2% YoY (Flat QoQ) To AED486mn

ADNOC Distribution posted 2Q24 core attributable profit (adjusted for inventory gains and forex losses) of AED486mn, up 2% YoY (flat QoQ), in line...

International Securities

3Q24 Quarterly Previews for IS Coverage Universe

We expect ADNOC Drilling to post 3Q24e shareholder’s profit of USD311mn, up 21% YoY and 6% QoQ. We expect total rig count to increase to 143 rigs,...

International Securities

Adnoc/Covestro: Fresh Takeover Negotiations and Valuation Scenarios

Covestro is trading at 8x (vs. 6.5x median of peers). To justify €70/share (sought last December), Covestro should overdeliver, but analysts and...

Jesus Rodriguez Aguilar

1st Quarter 2024 Letter to Investors

Outperformance of Metals and Mining sector: The fund's gold, copper, and lithium investments outperformed their respective industry...

Massif Capital Research

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