Malcolm Stacey was absolutely correct last Tuesday when he wrote HERE that Johnson Matthey (JMAT) ‘is a company which depends on its securing a good market share of the electric future and it’s certainly trying hard to succeed in this competitive field’. As I observed last September, ‘it is kind of tough to value potential 2030 themes, but it is nice to have a few of these things sprinkled into a broader corporate business which is already sensibly set’. In short, I have owned the stock for a while and currently sit on a nice profit. There have been two recent sets of numbers on this one during the last couple of weeks.
Whilst its full year numbers are out in late May, it was nice to read that ‘group operating performance is expected to be around the top end of market expectations’. Profitability will be unsurprisingly hit by some of the obvious issues of the last year but push it through to next year’s numbers and we probably have an EV:ebit multiple of about x13-14 times. This is neither super cheap nor super expensive but it is not too bad given ‘growth opportunities for our science-led strategy’ is a philosophy and profile that I can sign up for. And all of this is even before I start to talk about its ‘largest secondary platinum group metals (PGM) refiner in the world’. Naturally, such an exposure always helps when commodity prices go up.
As for the latest, I see that ‘Johnson Matthey announces strategic partnership for sustainable battery materials production and secures critical raw materials supply’. Certainly no bad thing to have agreed a strategic partnership with Finnish Minerals Group to locate a second factory to scale up its production of battery materials. Additionally it has provisionally secured long-term supplies of raw materials for batteries from Nornickel of Russia and SQM of Chile. It is not exactly dumb to be active in such a manner and it will help numbers in 2022 and beyond. After all let’s not forget - as the SQM CEO observed - ‘we are working on a major lithium expansion plan while at the same time reducing our environmental footprint by cutting our brine extraction and freshwater consumption in half by 2030’.
So I am happy to remain a holder of Johnson Matthey shares, which have moved back above a 32 quid share price today. Previously I have talked about a 35 quid share price target and I stick with this. That - after all - was around the share price peak during 2017-18. However what I see today is some clear further share price progress from back then. In short - if you are looking for a FTSE 100 winner - then forge a similar view to Malcolm and myself and buy a few here. The next update on Johnson Matthey for me will be after the full year set of numbers in a little over five weeks time.
Filed under: Johnson Matthey, Neill Ricketts, Imperial Brands, i-nexus, Remote Monitored Systems, Eurasia Mining
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