We have updated our model with the FY19 results. The company performed better than we had anticipated, especially in Turkey, where we priced in the impact of the country’s economic strains and devaluation of lira too conservatively.

Despite the company’s great performance in 2019, we have narrowed our estimates for 2020 and 2021, due to the COVID-19 pandemic.

We have only marginally reduced the EPS for 2020 and 2021 because they were already low as compared to the updated 2019 level. However, the company has not communicated anything about the impact of COVID-19, except for the fact that the operations in China are already regaining momentum.

Thus, for the moment, our current assumptions are based on a wet finger approach and we will make further changes once the company communicates on the impact and possibly a fresh set of targets during Q1 20 results.

Along with the change in earnings, we have increased the debt spread to 300bp. We have also changed the EBITDA growth to 1.5% from 2% in the out years because COVID-19 has added an extra layer of uncertainity to the earnings growth, on the already existent ETS Phase IV (Emission Trading Scheme) apprehension.

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