EFTA Document EFTA01385524

> Energy, Materials & Industrials (r) Glencore — Liam Fitzpatrick, BUY, close 391p, 430p tgt, 10% upside. ■ Strong organic growth from return of suspended capacity. Group volume growth is c7% pa to 2020, vs. peers at 2-3%. Giving full value for suspended capacity yields a blue-sky valuation of >£5/share. - Suspended zinc production stands at 500 Ktpa - we have c90/320/400kt of volume growth in 2018-20 in our numbers. - Also there is substantial suspended copper capacity. We have 8% YoY volume growth to 2020 in our numbers. - On copper, we are conservative given operational and country (DRC/Zambia) risks, so the risks to our estimates are to the upside. • Right base metal exposure. We are structurally bullish on copper, zinc, nickel and cobalt. - We believe copper will remain in deficit in 2018, which should support the copper price increases. Our forecasts are 297c in 2018E and 315c in 2019E, putting us 10% ahead of consensus. - Glencore's copper business is well-positioned on scale, margins and growth. • An EV play. Glencore is a longer-term structural winner of any shift to EVs given its strength in copper, cobalt and nickel. • Valuation is attractive at 2018 FCF yield of 14% at spot and 11% at our base case. in Catalysts: Copper prices/supply disruption, consensus upgrades, delivery against volume guidance Related DB Research: Glencore: Investor call —what did we learn? BUY case remains intact (Fitzpatrick) European Mining 2018 Outlook: Upside remains: a guide to 2018 (Fitzpatrick' Deutsche Bank We see the copper market moving further into deficit 800 (kt) 600 400 200 0 -200 -400 -600 min Surplus/(Defictt) —Surplus (Deficit) % of total demand 4% 3% 3% 2% 2% 1% 1% II I 0% - -1% 1% -2% -2% 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e Source: Deutsche Bank. Industry data Substantial volume growth to 2020E in zinc (below) and copper (8% p.a.) 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 (kt) 2014 2015 2016 2017F 2018F 2019F 2020F Source Doutscho Bank. Industry data Deutsche Bank Research* European Equity Focus - Jartualy 2018 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0086810 SDNY_GM_00232994 EFTA01385524