Category: Sectors

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LICs LICs

Metrics Master Income Trust Seeking to Raise $440m through Unit Purchase Plan

On 28 October 2021, MXT announced a Unit Purchase Plan (UPP) proposing to issue 220.8m new units at a price of $2.00 per unit. The Trust is targeting to raise ~$441.6m. While the Trust maintains the flexibility to accept applications in excess of the target raise amount, applications in excess of this amount may also be scaled back.

The Offer closed on 30 November 2021 with an Issue Date of 3 December 2021. New units are expected to commence trading on 6 December 2021.

Capital raised will be invested in accordance with the investment mandate and target return of the Trust.

MXT targets a return of the RBA cash rate plus 3.25% p.a. (currently 3.35% p.a. net of fees) through the economic cycle, with income distributions intended to be paid monthly. Since listing on the ASX in October 2017, MXT has delivered a net return of 5.15% pa.

Net Asset Value of metrics Master Income Trust is $1,573,565,708. Current Unit Price is $2.07. 

Performance 

Performance.png

Company Profile

The Investment Objective of the Metrics Master Income Trust is to provide monthly cash income, low risk of capital loss and portfolio diversification by actively managing diversified loan portfolios and participating in Australia’s bank‐dominated corporate loan market. The Manager seeks to implement active strategies designed to balance delivery of the Target Return, while seeking to preserve investor.

(Source: FN Arena, Bloomberg, MXT)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Funds Funds

UBS Property Securities Fund: The fund which aims to outperform the S&P/ASX 300 Property Accumulation Index

Investment strategy 

The Fund uses a multi-step investment process for constructing the Fund’s investment portfolio that combines top-down sector allocation with bottom-up individual stock selection. Top-down sector allocation is determined through a systematic evaluation of listed and direct property market trends and conditions. Bottom-up stock selection is driven by proprietary analytical techniques to conduct fundamental company analysis, which provides a framework for security selection through an analysis of individual securities independently and relative to each other. Investment return objective The Fund aims to outperform (after management costs) the S&P/ASX 300 Property Accumulation Index over rolling three year periods.

Investment return objective 

The Fund aims to outperform (after management costs) the S&P/ASX 300 Property Accumulation Index over rolling three year periods.

 Downside Risks

  • Deterioration in the Australian economy especially the property market (fundamentals deteriorate). Rising bond yields negatively impacting pricing. 
  • The Portfolio Manager/analysts miss-calculate their bottom-up valuation 
  • Key person risks in Mr. Pica (however, the CBRE investment team is relatively large and capable of succession planning). 

Fund Performance (as at 31 May 2021)

C:\Users\Akhila\Downloads\Screenshot 2021-12-23 163325.png

(Source: UBS)

Fund Positioning: Top 5 Holdings – Overweights & Underweights (as at 31 May 2021)

C:\Users\Akhila\Downloads\Screenshot 2021-12-23 164000.png

(Source: UBS)

Investment Process

The Fund uses an investment process that combines in-depth top-down and bottom- up fundamental market research with a disciplined and systematic approach to portfolio construction and risk management. The Portfolio Manager’s bottom-up approach integrates both quantitative and qualitative research to identify individual securities where the real estate is undervalued and represents the most compelling investment opportunities. The securities research process incorporates several factors including: 

  • Property visits – the Portfolio Manager utilises its local presence to gauge the quality and location of the real estate, assessing properties and capital expenditure needs at the property level. 
  • Management meetings – the Portfolio Manager assesses the management team’s alignment with shareholders; determines the depth and experience of the team; and judges their ability to articulate and execute their strategy. 
  •  Modelling – the Portfolio Manager generates cash flow earnings projections; performs net asset value analysis; and analyses the capital structure. 

About the fund

The UBS Property Securities Fund (portfolio managed by CBRE while Distributed by UBS) is a portfolio of mainly Australian Real Estate Investment Trusts that the investment team believes are being undervalued by the market, based on the in-house assessment of the company’s future cashflows. The Fund aims to outperform (after management costs) the S&P/ASX 300 Property Accumulation Index over rolling five-year periods 

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Funds Funds

Pendal Horizon Fund: An actively managed portfolio of Australian shares

 The Fund is led by Crispin Murray, who has over 27 years’ industry experience and is currently the Head of Equity Strategies at Pendal. Mr. Murray is supported by a research team of nineteen, including Mr. Rajinder Singh who has over 17 years’ experience in Australian equities and manages a range of sustainability and ethical funds for Pendal.

The benchmark index is S&P/ ASX300 Accumulation Index.

Downside Risks: 

  • Market & security specific risk including Australian economic conditions deteriorate. 
  • The Portfolio Manager/analysts miss-calculate their bottom-up valuation. 
  • Stock selection fails to yield alpha against the benchmark – Companies which are screened out, such as in materials, energy, gambling, outperform. 
  • Key man risks with Crispin Murray, Andrew Waddington and Jim Taylor.

Investment Team:

Pendal’s nineteen-member Equity team is one of the largest in the industry. The Fund is managed by Crispin Murray, who is also the Head of Equity and is assisted by Rajinder Singh, who has a combined 44 year’s industry experience.

Fund Performance:

Fund Positioning:

Sector Allocation:

Investment Philosophy & Process:

Investment Philosophy: The Fund’s investment philosophy is based on the belief that good corporate governance and sustainability is a central factor to a company’s longterm success. 

Investment Process: The investment process is driven by bottom-up, fundamental research of stocks listed on the Australian Stock Exchange (both large and small cap). The key features of the process are best described in the diagram below. The Manager also utilises a proprietary system as part of its investment process, which includes Analyst Analyser which is a database that captures analyst financial models, valuations and recommendations

About the Fund:

The Pendal Ethical Share Fund is an actively managed portfolio of Australian shares which seeks to ensure that funds are invested in an ethical and socially responsible manner. The Fund invests in companies whose practices and impacts are aligned with an investor’s own social, environmental and ethical preferences and aims to provide a return (before fees, costs and taxes) that exceeds the S&P/ASX 300 Accumulation Index over a 5-year period.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks

General Mills’ Strong Brands Provide the Pricing Power Needed to Combat Inflationary Pressures

Business Strategy and Outlook

As at-home food consumption remains elevated during the pandemic, consumers are finding favor with General Mills’ offerings, as shown by increases in household penetration and repeat purchase rates in most categories. It is expected that this lift will largely be temporary, with consumers gradually returning to activities outside of the home, returning away-from-home food expenditures to half, as it was prior to the pandemic. But it is also expected that a lasting benefit for General Mills’ pet food business exist, given the high-single-digit increase in pet adoptions during the crisis.

General Mills has earned a narrow moat rating for its preferred status with retailers, strong brand equities, and cost edge. Due to evolving nutritional preferences, consumers have been shifting from processed fare to fresh, natural options, causing General Mills’ categories to slow. In response, the firm laid out its Accelerate strategy in 2021, which calls for the company to overhaul its marketing and innovation processes. Specifically, the firm will shift media investments to digital formats to better align with consumer media consumption, it will launch bolder innovations with a faster speed to market, it will be a force for good-with purpose-driven brands–and it will invest in data analytics (leveraging proprietary data from its Box Tops program and brand websites) to drive growth. Further, the firm will reshape its portfolio by divesting 5% of sales that dilute growth and will acquire growing businesses that strengthen its five global platforms (cereal, pet, ice cream, snack bars, Mexican) or its positioning in its eight core markets (U.S., Canada, France, U.K., Australia, China, Brazil, and India).

Financial Strength 

General Mills has generally maintained a net debt/adjusted EBITDA ratio of under 3 times, although the fiscal 2018 acquisition of Blue Buffalo increased the metric to 4.8 times. But in fiscal 2021, the firm reduced leverage to below 3 times, returning the firm to its pre-acquisition capital allocation priorities of 1) capital expenditures, 2) dividend growth, 3) strategic acquisitions, and 4) share repurchases. In September 2020, General Mills implemented its first dividend hike since the tie-up, in the spring of 2021 it resumed share repurchases, and in July it closed on its $1.2 billion acquisition of no-moat Tyson’s pet snacks business. General Mills generates a significant amount of free cash flow (cash flow from operations less capital expense), averaging 15% of sales over the past three years, generally in line with our 14% annual average over the next five years. 

Bulls Say 

  • General Mills’ pet food business should benefit from the high-single-digit increase in pet adoptions during the pandemic. Its BLUE brand has been growing rapidly, as on-trend innovations are resonating with consumers.
  • The firm is modernizing its brand-building capabilities, with shortened lead times for new product launches and advertising budgets that are shifting to digital formats where consumers are spending more time. 
  • General Mills’ well-developed Strategic Revenue Management and Holistic Margin Management programs should help the firm offset steep cost inflation.

Company Profile

General Mills is a leading global packaged food company that produces snacks, cereal, convenient meals, yogurt, dough, baking mixes and ingredients, pet food, and superpremium ice cream. Its largest brands are Nature Valley, Cheerios, Old El Paso, Yoplait, Pillsbury, Betty Crocker, BLUE, and Haagen-Dazs. In fiscal 2021, 75% of its revenue was derived from the United States, although the company also operates in Canada, Europe, Australia, Asia, and Latin America. While most of General Mills’ products are sold through retail stores to consumers, the company also sells products into the food-service channel and the commercial banking industry

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ETFs ETFs Research Sectors

iShares S&P-ASX200- an attractive cost effective exposure to the top 200 Australian companies of ASX

Investment Objective: 

The Fund aims to provide investors with the performance of an index, before fees and expenses, composed of the 200 largest Australian securities listed on the ASX.

Portfolio Objective: 

Can be used as a core Australian equities exposure. 

Low cost access (relative to fund managers managing domestic portfolios) to the 200 largest companies on the ASX in a single fund.

Positives:

• Low cost exposure to broader market, without having to pick individual stocks. 

• Given the concentration in the Australian market, investors can use this ETF as a core holding whilst selecting lesser known stocks to drive portfolio alpha. 

Negatives: 

• Deterioration in Australian economy. 

• Aggressive increase in global bonds yields, leading to equity risk repricing. 

• Parent company experiences financial stress or negative corporate governance event.

ETF Performance:

ETF Positioning:

About the Company:

BlackRock is a global asset manager listed on the New York Stock Exchange. BlackRock has a comprehensive range of products and services across asset classes, geographies and investment strategies with 135.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Sectors Technology Technology Stocks

SAP reported solid 2Q21 result with revenue of €6.7bn

Investment Thesis :

  • Leading market share positions in on-premise enterprise resources planning (ERP) and on-premise customer relationship management (CRM) markets with customers in over 180 countries and strong brand awareness. 
  • The market is undervaluing SAP’s CRM business (relative to its peer group such as Salesforce.com).
  • Support revenues and Cloud subscriptions provide recurring revenue, which gives SAP a defensive profile. 
  •  Competent management team. 
  •  Strong operating and free cash flow generation with attractive dividend policy (payout ratio of at least 40%)

Key Risks

  • The Slower take-up for HANA and S/4HANA. 
  • Deteriorating sentiment if the economy and IT spending weakens. 
  • Market share loss in software revenue driven by cloud migration. 
  •  Aggressive M&A with risk of overpaying. 
  • Additional opex spending dampening margin expansion. 
  •  Key-man risk due to management changes. 
  • Competition from other established players like Microsoft, Salesforce.com and Oracle

Key highlights of FY 2021

Ongoing momentum in the business saw management slightly raised the bottom end of their previous guidance, which may have disappointed the market (i.e. investors may have been expecting a bigger bump up). Management’s 2021 outlook (non-IFRS @ CC): Cloud Revenue €9.3 – 9.5bn (prev. €9.2 – 9.5bn), up +15-18%; Cloud and Software Revenue €23.6 – 24.0bn (prev. €23.4 – 23.8bn), up +2-3%; and Operating Profit €7.95 – 8.25bn (prev. €7.8 – 8.2bn), flat to -4%. Management reiterated their operating cash flow guidance of approx. €6.0bn and FCF above €4.5bn.

2Q21 results highlights : Relative to the pcp: 

  • Total group revenue of €6.7bn was up +3% (in CC terms), driven by Cloud up +17%, Software licenses and support down -2% (Software Licenses down -13%, Software Support up +1%), Cloud and Software up +5% and Services down -7%. SaaS/PaaS cloud revenue (excluding Intelligent Spend) was up+25% (CC). Software Licenses were down -13% (CC) as expected and were ahead of expectations. Current Cloud Backlog (CCB) was up +20% (CC terms) to €7.8bn, with SAP S/4HANA CCB up +48% to €1.1bn.
  • From a region perspective, Asia Pacific & Japan revenue was solid (Cloud up +23% in CC; Cloud & Software up +6% in CC) while Americas (Cloud up +12% in CC; Cloud & Software up +5% in CC) and EMEA (Cloud up +23% in CC; Cloud & Software up +5% in CC) also saw good growth. Operating profit of €1.9bn was down -2% on pcp, but up +3% in CC terms. Operating margins were down -30bps to 28.8%

Company Profile:

SAP SE (SAP) is a global software and service provider headquartered in Walldorf, Germany, operating through two segments: Applications, Technology & Services segment, and the SAP Business Network segment. The Applications, Technology & Services segment is engaged in the sale of software licenses, subscriptions to its cloud applications, and related services and the SAP Business Network segment includes its cloud-based collaborative business networks and services relating to the SAP Business Network (including cloud applications, professional services and education services). SAP is the market leader in enterprise application software and also the leading analytics and business intelligence company, with the Company reporting that more than 77% of all transaction revenue globally touches an SAP system.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Sectors

Medtronic Plc reported solid FY 21 result with revenue of $30.1bn and adjusted EPS of $4.44

Investment Thesis 

  • The Company trades on 2-yr PE-multiple of 19.5x and dividend yield of 2.1%, which is attractive in our view. 
  •  The Company should come out of COVID-19 in a solid position, with significant balance sheet liquidity increasing flexibility to undertake strategic M&A and invest in the business. 
  •  Market leadership position in medical equipment and supplies industry. 
  •  Global footprint with continuing strong growth in EM. 
  •  Successful track record of developing breakthrough technologies. The Micra AV transcatheter pacing system is expected to be a blockbuster. 
  •  Opportunities in growing diabetes market. 
  • Successful M&A to gain strategic advantage

Key Risks

  • Aggressive competition by other established players putting pressure on margins. 
  •  Strict government regulations and scrutiny. 
  •  IP theft by countries like China. 
  •  Challenging political environments with U.S.-China trade war and Brexit. 
  •  Downturn in U.S. economy given the fact that the company still derives 51% of its revenue from the local market. 
  •  Currency headwinds

Key financial highlights of year2021

  • Revenue of $30.117bn increased +4% over pcp (+2% on an organic basis, which adjusts for the $331m benefit of foreign currency translation, the $15m inorganic benefit of the company’s acquisition of Titan Spine in the Cranial & Spinal Technologies division in the Neuroscience Portfolio, and the $360-390m benefit the company received from an extra week in 1Q21 compared to 1Q20). 
  •  Net earnings were $3.606bn or $2.66 per diluted share (non-GAAP earnings and diluted EPS were $6.005bn and $4.44, respectively, both decreasing -3%, however, adjusting for the negative 22 cent impact from FX, non-GAAP diluted EPS increased +2%). 
  •  Cash flow from operations was $6.240bn, down -13.7% over pcp and FCF was $4.885bn, down – 18.9% over pcp and representing FCF conversion from non-GAAP net earnings of 81%. 
  •  The Company ended the year with a cash position ~$10.8bn.

Management’s FY22 outlook

  • Organic revenue growth acceleration to +9% with FX having a positive impact of $400-500m (1Q22 organic growth of 17-18%, and a currency tailwind of $200-250m at recent rates). 
  • Cardiovascular and Neuroscience to grow 10-11%, Medical Surgical to grow 6-7%, and Diabetes to grow 3-4%, all on an organic basis (1Q21 Cardiovascular to grow 14-15%, Medical Surgical to grow 18-19%, Neuroscience to grow 25-26%, and Diabetes to be flat). 
  •  Non-GAAP diluted EPS in the range of $5.60-5.75, including a benefit of 10-15 cents from currency at recent rates (1Q21 EPS of $1.31-1.34, including a currency tailwind of 3 cents at recent rates).

Company Profile:

Medtronic Plc (MDT) is a medical technology, services and solutions company operating in four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group and Diabetes Group. The Cardiac and Vascular Group segment includes cardiac rhythm and heart failure, coronary and structural heart, and aortic and peripheral vascular; Minimally Invasive Therapies Group segment includes surgical solutions, and patient monitoring and recovery; Restorative Therapies Group segment includes spine, neuromodulation, surgical technologies and neurovascular and the Diabetes Group segment includes intensive insulin management, non-intensive diabetes therapies, and diabetes services and solutions.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks

Coca – Cola cash flow generation improved with ongoing FCF of $661m and cash realisation of 124.7%

Coal is excavated at the Jim Bridger Mine, owned by energy firm PacifiCorp and the Idaho Power Company, outside Point of the Rocks, Wyoming March 14, 2014. West Virginia mined 120 million tons (109 metric tons) of coal in 2012, second to Wyoming, or about 12 percent of total U.S. production. Kentucky was third with about 9 percent of output, according to the National Mining Association. REUTERS/Jim Urquhart (UNITED STATES - Tags: ENERGY BUSINESS) - RTR3H5NY

Investment Thesis 

  • Currently under a takeover target. 
  • Structural challenges – consumers moving away from carbonated soft drinks (CSD). 
  • Increased competitive pressures from other beverage companies or margin pressure/erosion from supermarket chains.
  • Cost pressure eroding margins, including the NSW container deposit scheme. 
  • CCL not being able to push through price increases to clients. 
  • CCL has a strong global brand portfolio with diversified product offering.
  • Strong growth in NZ, Indonesia and PNG. 
  • Management is focused on cost out and reinvestment, growing efficiency and margins as a result.

Key Risks

  • CCL unable to sustain the turnaround especially in International segments. 
  • Company meets or exceeds its full year guidance. 
  • Increased competitive pressures. 
  • Cost pressure eroding margins, including the NSW container deposit scheme. 
  • CCL not being able to push through price increases to clients.
  • International segment unable to deliver growth.

Key Financial Results 

  • Volumes for the year were down -4.2% over pcp and revenue declined -3.5% to $2.94bn with a more pronounced decline in ongoing EBIT (down -14.7% to $362.6m with margin down -170bps to 12.3%) due to changes in channel and pack mix (multi-serve PET and multipack cans increasing and demand for immediate consumption offerings decreasing) as consumer behaviour responded to Covid-19 lockdown measures. Management have seen a recovery in volumes starting 2H20, with strong momentum carried into January 2021 trading. 
  • The Company was able to achieve market share gains in the non-alcohol ready to drink (NARTD) market which grew during the year, delivering NARTD volume share gains of +0.7% with Coca-Cola Trademark increasing its volume share by +0.4%. 

Company Profile 

Coca-Cola Amatil (CCL) manufactures, distributes and sells carbonated soft drinks along with still and mineral waters, fruit drinks, ready-to-drink coffee and tea and flavoured milk drinks. CCL also rents and services commercial refrigeration equipment to food/beverage manufacturers.

(Source: BanyanTree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Financial Markets Sectors Technology Technology Stocks

Alphabet Inc. earnings momentum to continue driven by Cloud Business and focus on AI and Machine Learning

The concept of 5G network with magnifying glass on modern circuit board, high-speed mobile internet and new generation networks technology background

Investment Thesis:

  • Commands a strong market position in online advertising and online eyeballs. 
  • Search advertising increasing its share of advertising spend. 
  • Leveraged to online video steaming and advertising via YouTube. 
  • Strong balance sheet with over US$130bn in cash, which gives flexibility to invest in growth options or undertake capital management initiatives. 
  • Focus on innovation across advertising businesses, which should help to sustain growth. 
  • Strong management team. 
  • Value accretive acquisitions in existing and new growth areas. 
  • Recent disclosure suggests GOOGL’s Cloud business building good revenue momentum.

Key Risks:

  • Threat of increased regulatory scrutiny, including concerns around consumer privacy and personal data.
  • Regulatory changes which impacts the way GOOGL does business (e.g. forced changes to products). 
  • Expenses such as TAC (traffic acquisition costs) increase ahead of expectations and which the company is unable to pass onto customers. 
  • Deterioration in economic conditions, which would put pressure on the advertising revenue. 
  • Competition from companies like Facebook Inc., Amazon etc. could put pressure on margins. 
  • Potential return from investment on new, innovative technology fails to yield adequate results.

Key highlights:

  • GOOGL reported a very strong quarter, with revenues of $61.9bn up +61.6% (or up +57% in constant currency).
  • Total Google Services revenues of $57.1bn was up +63%, with Google Search & Other up +68.1% (led by strong growth in retail), YouTube ads up +83.7% (driven by brand and direct response) and Google advertising up +60.4% (driven by Ad Manager and AdMob)
  • Google Cloud revenue was up +53.9% to $4.6bn, driven by growth in infrastructure and platform services. GOOGL’s total cost of revenues of $26.2bn was up +41%, driven by growth in TAC (traffic acquisition costs), which was up +63% to $10.9bn. Group operating income was up +203.3% to $19.4bn (with margin expanding to 31.3% from 16.7% in pcp), driven predominantly by Google Services (up +134.2% to $22.3bn).
  • GOOGL continues to spit out significant amount of cash from operations, reporting free cash flow of $16.4bn in 2Q21 and $58.5bn over the trailing 12 months.
  • At the end of the quarter, the balance sheet had $136bn cash (& equivalent). The Board has amended the existing $50bn stock repurchase program to permit the repurchase of both Class A and Class C shares.

Company Description: 

Alphabet Inc is headquartered in Mountain View, California, and provides online advertising services across the globe. It offers performance and brand advertising services through Google and Other Bets segments. The Google segment offers products, such as Ads, Android, Chrome, Google Cloud, Google Maps, Google Play, Hardware, Search, and YouTube, as well as technical infrastructure. This segment also offers digital content, cloud services, hardware devices, and other miscellaneous products and services. The Other Bets segment includes businesses, including Access, Calico, CapitalG, GV, Verily, Waymo, and X, as well as Internet and television services.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks

Johnson Matthey PLC diversified global stock with good financial health

Business Strategy and Outlook

Johnson Matthey is a U.K.-based specialty chemical company with unique expertise in catalysts, chemicals, and manufactured products derived from platinum group metals, or PGMs. Sales are fairly concentrated in developed markets, particularly Europe and North America. China, growing fast, now accounts for 15% of sales. Roughly 60% of sales are targeted at the automobile sector. 

The clean air segment is the company’s largest (51% of EBIT) and is the foundation of narrow moat rating. The segment, a global leader in a highly concentrated market, manufactures auto catalysts for cars and heavy-duty trucks that reduce emissions and improve air quality. Success is primarily dependent on increasingly stringent environmental legislation, which allows the company to develop novel solutions that can be sold at premium prices. While the advent of electric vehicles will ultimately cause auto catalysts to move into secular decline, it is still seen to have more than a decade of high returns for the business.

Other core segments include efficient natural resources and health, which contribute 44% and 5% of EBIT, respectively. Efficient natural resources manufacture industrial catalysts for the chemical and oil and gas sectors, licenses technology for chemical processing, and includes the precious metals refining and manufacturing business. EBIT should fall in the next few years as high PGM prices normalize, but the overall outlook for the segment remains solid. The health segment is a global leader in manufacturing active pharmaceutical ingredients, or APIs, for controlled substances like opiates and amphetamines. Growth will depend on success of the pipeline of new APIs, which is still a few years away. 

The company also offers fuel cells, technology for blue hydrogen production, and components for green hydrogen plants

Financial Strength

Johnson Matthey is in good financial health. The model-driven credit risk assessment is moderate. The company targets a net debt (including post-tax pension deficits) to EBITDA ratio of 1.5-2 times. As of September 2020, the ratio stood at 1.6 times. The company’s debt maturity profile is balanced, with a good portion of borrowings having maturity dates more than five years and no major refinancing due in 2020 or 2021.

Bulls Say’s

  • The pipeline of increasing global environmental legislation targeting vehicle emissions remains full for the foreseeable future. 
  • Johnson Matthey’s expertise in hydrogen and fuel cells should enable the company to be a meaningful player when these markets develop. 
  • Johnson Matthey is positioned to benefit from current megatrends such as increasing environmental concerns and rising wealth in emerging markets.

Company Profile 

Based in the U.K., Johnson Matthey is a global leader in production of emissions catalysts for automobiles and trucks. The company also manufactures industrial catalysts for the chemicals and oil and gas sectors, and a variety of other industrial products derived from platinum-group metals.

(Source: MorningStar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.