Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward – Vallourec (VLLP.PA)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Tubes utilisation rate (%) 62.9 58.6 71.0 70.0

Tubes EBITDA ($/tonne) (US$) 623 690 670 670

62% Fe CFR China iron ore index

102 99 93 94

($/tonne) (US$)

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

OCTG demand in international markets and in RISKS TO UPSIDE FY Dec 2026e

the US Higher OCTG demand, particularly for seamless

Last steps of long turnaround story that closed tubes Sales / 4,213

the execution gap to peers Further cost savings Revenue 4,119 5,270

Shareholder distributions Higher shareholder distributions (US$, mn) 4,662

Capital discipline in OCTG Higher iron ore prices

RISKS TO DOWNSIDE

GLOBAL REVENUE EXPOSURE EBITDA

Softer outlook for commmodity prices, driving 851 1,203

(US$, mn)

0-10% Europe ex UK down demand for OCTG 998

0-10% Mainland China More competitive environment vs. peers

0-10% UK Lower iron ore prices

10-20% MEA Shareholder restructuring Net income

341 647 30-40% Latin America (US$, mn)

30-40% North America 483 OWNERSHIP POSITIONING

Source: Morgan Stanley Research Estimate

View explanation of regional hierarchies here Inst. Owners, % Active 68.8% EPS 1.35

HF Sector Long/Short Ratio 2x (US$) 1.31 2.73

1.91

MS ALPHA MODELS HF Sector Net Exposure 3%

MSPB Content. Includes certain hedge fund Mean Morgan Stanley Estimates 3 Month Refinitiv; 3/5 exposures held with MSPB. Information may be Source: Refinitiv, Morgan Stanley Research Horizon MOST inconsistent with or may not reflect broader market

trends. Long/Short Ratio = Long Exposure / ShortSource: Refinitiv, FactSet, Morgan Stanley Research; 1 is

exposure. Sector % of Total Net Exposure = (For athe highest favored Quintile and 5 is the least favored