Umicore Model update: order book building and balance sheet fears recede
We updated our model following the recent investment decision in a 35 GWh Canadian pCAM/CAM plant and 10y supply agreement with AESC. As we already incorporated the targeted 400 GWh CAM sales by 2030 and maintain that scenario, P&L changes are very limited. However, the significant government grants on the Canadian project help to lower peak leverage assumptions in 2026 from c. 3 to 2.4x, in line with Umicore's guidance of not surpassing 2.5x. We remind that Umicore has now secured an order book of 270 GWh by 2030, or c. 68% of the 400 GWh ambition. We maintain our viewpoint that Umicore is well placed to play an important role in the electrification of transportation as we believe that global OEMs are determined to establish local supply chains in ao Europe and North America. High manganese and solid-state technologies will in our opinion support the position of NMC-chemistries outside of China in the coming decade. Whilst CAM-related growth is the major growth driver for Umicore in the remainder of this decade, battery recycling has the potential to also become a major growth driver into the next decade, with site selection for a first industrial plant ongoing. We maintain our BUY rating and € 38 target price.Umicore is global player in the materials technology and recycling industries. Co. focuses on application areas such as chemistry, materials science, metallurgy and recycling. Co.'s business model comprises four segments: Catalysis, Performance Materials, Energy Materials and Recycling. Catalysis focuses on the abatement of global automotive emissions; Performance Materials focuses on materials that help develop more sophisticated and safer products; Energy Materials produces materials used in the production and storage of clean energy including rechargeable batteries and photovoltaics; and Recycling treats complex waste streams containing precious and other non-ferrous metals.
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