Morningstar | Johnson Matthey Hits Two Milestones in eLNO Commercialisation Process; Shares Fairly Valued
Johnson Matthey announced that it has achieved two milestones in the commercialisation process of its eLNO cathode material. First, the company secured a site in Poland for the construction of the commercial plant. Second, a long-term supply agreement was signed with Nemaska Lithium. However, the timeline to production has shifted out slightly since our last update. Consequently, we have delayed our expectations of material growth in battery materials one year to fiscal 2023, in line with company targets. The impact to Johnson Matthey’s valuation is negligible. We maintain our narrow moat rating and GBX 3,200 fair value estimate. At current levels, the shares look fairly valued.Johnson Matthey intends to build an eLNO plant in Poland with capacity of 10,000 tonnes per annum. The site will have potential for expansion to 100,000 tonnes per annum. The supply agreement with Nemaska Lithium will provide Johnson Matthey with lithium hydroxide for eLNO over a 10-year period. The agreement calls for volume and phasing aligned to Johnson Matthey’s production plans.
Johnson Matthey is a provider of sustainable technologies. Co. operates in five divisions: Emission Control Technologies, a manufacturer of catalysts and catalyst systems that enable clean air; Process Technologies, a supplier of catalysts, licensing technologies and other services to the syngas, oleo/biochemical, petrochemical, oil refining and gas processing industries; Precious Metal Products, which include management, distribution, refining and recycling of precious metals, and fabricate products; Fine Chemicals, a supplier of active pharmaceutical ingredients and custom services for pharmaceutical customers; and New Business, which focuses on additional areas of potential growth.
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