UMICORE - · Thin Film Products Umicore Thin Film Products is one of the leading producers of source materials (evaporation materials and sputtering targets) for vacuum deposition

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Conclusion: The 'cleantech' excitement has cooled down in recent months. The cost of batteries has to decline in order to accelerate the demand for electric cars. Budget tight governments need to stimulate change with subsidies in order to get more electric cars on the road. Tradional car manufacturers need time to convert their production lines. The long-term potential of the new activities is the most important factor for its share price potential. An optimistic scenario calculates the fair price around 44 Euro.

FOR QUALIFIED INVESTORS ONLY, Please see inside front cover for important disclosures

Share Price 36.57 EUR Number of shares 246.4 m

Fair Value 44.00 EUR Market Cap 9011 mEUR

Upside 20% Enterprise Value 8996 mEUR

Symbol UMI Credit Rating NA

Isin Code BE0974320526

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Sales 2,751 2,490 2,394 2,335 2,635 2,673 2,916 3,568 4,208 4,829

Growth 24.7% -9.5% -3.8% -2.5% 12.8% 1.4% 9.1% 22.4% 17.9% 14.8%

EBITDA 537 483 421 345 388 417 473 700 809 947

Margin 19.5% 19.4% 17.6% 14.8% 14.7% 15.6% 16.2% 19.6% 19.2% 19.6%

EPS 1.43 1.05 0.80 0.79 0.78 0.60 0.97 1.53 1.76 2.00

P/E 11.4 18.3 23.0 21.5 24.9 37.9 43.5 23.9 20.7 18.3

EV/EBITDA 7.4 9.3 10.3 11.5 11.7 12.7 19.3 12.1 10.5 8.9

Dividend 0.50 0.50 0.50 0.50 0.60 0.65 0.70 0.74 0.76 0.78

Dividend Yield 3.1% 2.6% 2.7% 2.9% 3.1% 2.9% 1.7% 2.0% 2.1% 2.1%

0

10

20

30

40

50

60

Analyst Wim Lewi, CFA Valuescan.be [email protected]

UMICORE Equity Report

14/12/2018

mailto:[email protected]

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1

I. Company Description

Activities

Description: Umicore answers to the increasing recycling needs in society. The company has completed a

successful transformation from metal producer to an 'above ground' mining company. The company now

refines precious metals and other rare materials from industrial and other electronic waste. The Hoboken

reactor is the core activity . Umicore is, together with Johnson Matthey, the market leader in the

production of catalytic converters. Umicore has also invested recently in promising technologies, such as

battery raw materials for electric cars.

The history of Umicore goes back to the creation of Union Minière in 1989 by the merger of four companies

in the mining and smelting industries. Umicore has since reshaped itself into a more technology-focused

business encompassing such areas as the refining and recycling of precious metals and the manufacture of

specialised products from precious metals, cobalt, germanium, zinc and other metals. To symbolise this

trend of moving away from mining and the production of commodities and base metals, the group Union

Minière changed its name to Umicore in 2001.

In 2005, its copper smelting activities were spun off in Cumerio and in 2007, the zinc smelting activities

were also listed opportunistically in 2007 into the Nyrstar vehicle.

The company has been a component of Belgium's benchmark BEL20 stock market index since its 1991

inception.

Umicore is play on the emerging ‘cradle to cradle’ mentality. The company has made a successful switch

from metal processor to an ‘urban mining’ company that gains precious metals and other rare materials

from waste. Umicore also invests into promising technologies like materials for electric vehicle batteries

Recycling23%

Catalysis25%

Energy Materials

52%

Elimin./Discont.0%

Recycling17%

Catalysis35%

Energy Materials

45%

Elimin./Discont.3%


2

and recycling techniques. However the early ‘cleantech’ excitement has cooled and we probably need

another major natural disaster before governments become serious again and use their stretched budgets

to stimulate change. The company share buy-back price level of around 33 Euro also supports market

sentiment. GBL is also steadily increasing its stake.

Recycling treats complex waste streams containing precious and other non -ferrous metals. The operations

can recover some 20 from a wide range of input materials ranging from industrial residues to end-of-life

materials. The business group is organized in six business units: Precious Metals Refining,

Battery Recycling, Jewellery & Industrial Metals, Precious Metals Management, Technical Materials and

Platinum Engineered Materials.The Umicore's precious metals facility in Hoboken, Belgium has become the

flagship of the group. Umicore is often called an ‘urban or above-ground mining company’ as it derives its

metals and mining products from objects that have been in use in industrial or consumer products.

Risks

The decline of precious metals as part of the global metals correction has hurt the recycling activity.

The gold price has proven resilient over 2015-2016, compared to most industrial metals that suffer from

overcapacity and slower demand (China). Competition for waste and industrial scrap could increase as

competitors are attracted by the high ROI of recycling. Higher waste acquisition costs can eat into the profit

margin of Umicore and its clients.

Precious Metals Refining

Umicore is the world's largest recycler of precious metals. Most of the materials (around 66% in terms of

refining charges) put through the refining process are by-products from the production of non-ferrous

metals, such as dross, matte and speiss from the zinc smelting industry and anode sludge built up during

electrolysis. Other sources of materials used for recycling include slag, spent fuel cells, automotive and

industrial catalysts and scrap electronic equipment.

Battery Recycling Battery Recycling is a second business unit, focused on the recycling of spent rechargeable batteries from

laptops, mobile phones and hybrid electric vehicles. Jewellery and Industrial Metals produces semi-finished

precious metals-based products, for jewellery and industrial applications and is a major recycler of scrap

and residues from the jewellery industry.

Precious Metals Management

The Recycling segment also encompasses a management unit, which sells precious metals in ingot form to

industrial clients and offers access to related financial instruments for hedging purposes. The unit is based

in Hanau, Germany. This division delivers typically to large gold and silver investors that store physical

commodities for clients, like gold ETF’s, central banks, etc…

Technical Materials

The Technical Materials Business Unit is one of the leading suppliers of functional materials for high-tech

industries. The material solutions, semi-finished products and building components are key components for

many production processes. Technical Materials is divided into two business lines: BrazeTec and Contact &

Power Technology Materials. BrazeTec materials are used to manufacture products like spectacle frames,

cooking ware, cutting tools, mills, radiators and air conditioning equipment. Umicore is also a leading

manufacturer of high-quality materials for metallic contacts for use in electrical engineering.


3

Platinum Engineered Materials

This unit manufactures platinum-based components for the chemical industry and the glass industry.

Applications in the chemicals industry include chemical intermediates, emission trading, animal feeding,

fertilizers, explosives and transparent plastics. Applications in the glass industry include display glass,

technical glass, chrystal glass, fiber glass and optical glass.

The Energy and Surface Technologies division manufactures a range of specialised metal products like

oxides and salts of cobalt, lithium and nickel for use in the production and storage of clean energy including

rechargeable batteries and photovoltaics. The metals are also used for a range of other applications like

glass and ceramics. The division also produces and markets products of germanium, both in compounds for

doping optical fibres and in semiconductor wafers.

Energy Materials is headquartered at the company's plant in Olen near Antwerp, with production and

commercial facilities in a number of countries worldwide.

The business group is composed of four business units - Cobalt and Specialty Materials, Electro-Optic

Materials, Rechargeable Battery Materials and Thin Film Products.

Cobalt and Specialty Materials Umicore Cobalt & Specialty Materials produces a variety of cobalt- and nickel-based chemicals for the

following application areas: the production of rubber tyres, pigments for ceramics, catalysts for paint

drying, plastic production and nickel chemicals for surface treatment. Umicore also produces cobalt and

pre-alloyed powders for the production of diamond tools and hard metal applications such as stone cutting,

construction and wear parts. Besides, the unit offers a range of recycling services such as the recovery of

cobalt from customers in the petrochemical and hard metals industries and the recovering of rhenium from

super alloys.

Electro-Optic Materials

The main markets for this unit are thermal imaging and opto-electronic applications, for which Umicore

supplies germanium wafers, infrared lenses and optics, and germanium-based chemicals.

Umicore’s Infrared Optics for thermal imaging provides innovative optical solutions for automotive night

vision, thermography and security and surveillance, firefighting and many others. Germanium wafers are

used in terrestrial solar cells (CPV), space solar cells, high brightness LEDs, and various semiconductor

applications. Umicore produces the highest quality of GeCl4 available in the industry.


4

Rechargeable Battery Materials

Rechargeable Battery Materials provides cathode active material for a range of applications. One in five Li-

ion batteries ever produced for portable electronics contains Umicore materials. These are also used in the

hybrid automotive industry. Electric vehicles are recognized by the market as being the biggest growth area

for Li-ion batteries for the years to come. Umicore materials can be found in more than 15 electrified cars

that are on the market today. Another application is stationary storage. Umicore focuses on grid

stabilization, on back-up power and on home energy storage systems for domestic solar panel applications.

A fourth application are handheld electrical tools which increasingly need higher power and come with

more demanding weight restrictions.

Thin Film Products

Umicore Thin Film Products is one of the leading producers of source materials (evaporation materials and

sputtering targets) for vacuum deposition of thin films. The unit is active in the business fields of optics

(anti reflective coatings), optical data storage, wear protection & decorative coatings (door handles, turning

tools,..), electronics & semiconductors, displays, photovoltaic cells, and architectural glass.

The activities are organized in two main business lines: Large Area Coatings (LAC) and Optics & Electronics.

Umicore was the pioneer and continues to be the market leader in cylindrical (rotary) Indium Tin Oxide

sputtering targets for displays, photovoltaics and architectural glass coatings.

Electroplating

Umicore’s Electroplating is one of the world's leading suppliers of precious metal electrolytes and special

processes for electroplating used for technical, functional and decorative applications. Our portfolio is

complemented by precious metal compounds and electrocatalytical anodes and cathodes. Umicore

produces electrolytes and anodes for the following application areas: electronics (connectors,

LED/Leadframe, sliprings, smartcards, relays), decorative surfaces (jewellery, fittings, clothing accessories,

spectacle frames, writing utensils, cosmetics packaging), industrial applications (hydraulic components and

automotive) and printed circuit boards.

Umicore's catalysis is composed of two subdivisions, Automotive Catalysts and Precious Metals Chemistry.

In automotive catalysts, a field in which the company had begun research in 1968, the company ranks third

in global market share behind BASF Catalysts (formerly Engelhard) and Johnson Matthey. Umicore

increased its presence in the sector with the June 2007 purchase of the catalyst division of troubled

American auto parts manufacturer Delphi for 55.6m USD.

The Automotive Catalysts unit produces catalysts that are used in automotive emission systems for light-

duty and heavy-duty vehicles. The catalysts perform in a wide range of powertrains, including gasoline and

diesel engines, natural gas, and alternative fuels, and are increasingly important in engines supporting mild

and full hybrid vehicles. Umicore develops catalytically active after treatment solutions which transform

pollutants into harmless gases before releasing them into the environment. The catalytically active

materials consist of a combination of oxides and precious metals like platinum, palladium and rhodium

incorporated into a porous structure which allows intimate contact with the exhaust gas.


5

(Source : Company presentation)

Precious Metals Chemistry converts metals into inorganic and organometallic chemicals, highly potent

Active Pharmaceutical Ingredients (APIs) and novel homogeneous catalysts for use in the fine chemicals, life

science and pharmaceutical industries. Umicore products are present in daily applications such as tooth

paste, LCD screens and swimming pools.

Discontinued : due to the search for divestment the two zinc businesses of Building Products and Zinc

Chemicals are no longer included in the three major business lines.

Building Products

Building Products is specialized in the manufacture and marketing of rolled zinc products

(VMZINC®) for building envelopes and interior wall cladding. VMZINC offers a range of

systems supplied with preformed finishing accessories produced specifically for covering

facades in the service and residential sector, for both new construction and renovation.

Zinc Chemicals

Umicore Zinc Chemicals transforms zinc into high quality products that are used for corrosion or ultraviolet

radiation protection. The business unit is a global leader in the production of fine zinc powders, zinc oxide

and zinc battery materials as well as being a reference in zinc recycling. Zinc powders provide corrosion

protection in industrial coatings used in ships, sea containers and construction. Zinc battery materials are

used in cylindrical alkaline batteries and a variety of emerging energy storage applications.


6

II. Business Model

A. Growth Expectations

Long term growth drivers, focus on the Energy segment : 20% growth till 2025

Growth Conclusion

0

1,000

2,000

3,000

4,000

5,000

6,000Sales

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total car sales in k units 72610 77250 79020 81500 79055 78264 79047 80628 82241 83885 85563

Car % growth 6.4% 2.3% 3.1% -3.0% -1.0% 1.0% 2.0% 2.0% 2.0% 2.0%

% EV car sales 0.8% 1.0% 1.6% 2.6% 3.0% 4.5% 8.0% 12.5% 18.0% 24.0% 30.0%

EV car Sales k units 546 796 1281 2100 2372 3522 6324 10079 14803 20132 25669

Avg battery in kWh 33 35 38 40 42 44 50 52 55 60 65

Cobalt in g/kWh 204 200 196 186 175 169 161 151 143 134 125

Cobalt in EV batteries 3,676 5,572 9,541 15,624 17,432 26,189 50,906 79,136 116,428 161,865 208,560

% EV car sales 2.4% 2.4% 2.6% 2.8% 4.0% 6.0% 5.0% 6.0% 5.0% 4.0% 2.0%

(P)HEV car Sales k units 1750 1880 2050 2280 3162 4696 3952 4838 4112 3355 1711

Avg battery in kWh 9 10 12 12 15 15 15 15 15 15 15

Cobalt in g/kWh 204 200 196 186 175 169 161 151 143 134 125

Cobalt in (P)HEV batteries 3,213 3,760 4,822 5,089 8,301 11,904 9,545 10,957 8,820 6,744 3,209

Cobalt in Car batteries 6,889 9,332 14,362 20,713 25,732 38,093 60,451 90,094 125,248 168,610 211,769

Cobalt In Other batteries 40,537 40,701 40,865 41,029 42,459 43,380 44,959 45,329 45,352 46,411 47,450

Cobalt In non-battery 45,479 47,201 48,923 50,645 52,412 54,039 55,473 56,625 57,805 58,706 59,623

Total Cobalt Demand kton 92,905 97,234 104,150 112,387 120,603 135,512 160,883 192,048 228,405 273,727 318,842

Growth 5% 7% 8% 7% 12% 19% 19% 19% 20% 16%


7

Umicore's sales have always had a high correlation with the gold price through the recycling

activity. Not only because a lot of gold is recycled, but also because other precious metals have a

high correlation with the gold price. Since 2011, the investment fever around gold has declined to

a level that is closer to the mining costs of the smaller mines. A gold price between 1150 and 1250

USD per Oz. results in a bottom-out of the recycling turnover. The growth over the coming years

will be driven by new technologies such as electric cars and improved catalysts. Umicore produces

the basic materials for these technologies and can also recycle them at a later stage. As a result,

the company has positioned itself at the top of sustainable companies worldwide.

Sales by Segment overview

Sales overview Peers

UMICORE Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 Y2019 Y2020

Recycling 863 757 678 663 641 650 661 723 758

Catalysis 880 867 917 1,094 1,164 1,254 1,371 1,452 1,544

Energy Materials 424 460 488 587 610 894 1,419 1,914 2,409

Elimin./Discont. 323 310 252 291 258 118 118 118 118

Totals 2,490 2,394 2,335 2,635 2,673 2,916 3,568 4,208 4,829

Growth%

Recycling -12.3% -10.4% -2.2% -3.3% 1.4% 1.6% 9.5% 4.8%

Catalysis -1.5% 5.8% 19.3% 6.4% 7.7% 9.3% 6.0% 6.3%

Energy Materials 8.5% 6.1% 20.3% 3.9% 46.6% 58.7% 34.9% 25.9%

Elimin./Discont. -4.0% -18.7% 15.5% -11.3% -54.3% 0.0% 0.0% 0.0%

Totals -3.8% -2.5% 12.8% 1.4% 9.1% 22.4% 17.9% 14.8%

-40%

-20%

0%

20%

40%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Peer growth

UMICORE Minerals TechnologiesWacker Chemie AG Johnson MatyPPG Industries


8

B. Profitability

Short term news and recent results

T

Profitability conclusion

There is still a lot of margin potential in the new Energy technologies that are growing faster and improve

the profit mas. As the electric car reaches a greater penetration by 2025, the profit margin in this segment

will increase significantly. From 2020 onwards, the recycling of the batteries will also ramp up and the

current dependence on rare materials like cobalt mining will be reduced.

Profit by segment

Profitability overview Peers

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

EBIT%

EBIT 2012 2013 2014 2015 2016 2017 2018 2019 2020

Recycling 280 221 149 142 125 121 143 144 168

Catalysis 91 73 63 124 152 161 174 162 185

Energy Materials 34 40 54 70 74 110 225 330 434

Elimin./Discont. -8 7 4 -1 -7 -5 0 0 0

Corporate -51 -60 -56 -92 -79 -42 -43 -43 -44

Totals 346 281 214 243 265 345 499 594 743

Margin%

Recycling 32.4% 29.2% 22.0% 21.4% 19.5% 18.6% 21.7% 19.9% 22.2%

Catalysis 10.3% 8.4% 6.9% 11.3% 13.1% 12.8% 12.7% 11.2% 12.0%

Energy Materials 8.0% 8.7% 11.1% 11.9% 12.1% 12.3% 15.9% 17.3% 18.0%

Elimin./Discont. -2.6% 2.3% 1.7% -0.5% -2.7% -4.5%

Totals 13.9% 11.7% 9.2% 9.2% 9.9% 11.8% 14.0% 14.1% 15.4%


9

0%

5%

10%

15%

20%

25%

30%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Peer EBITDA%

UMICORE Minerals Technologies

Wacker Chemie AG Johnson Maty


10

C. Capital Needs

(Source: Company data, Valuescan.be estimates)

Capex

Heavy investment cycle FY17-18.

Working Capital

Increases with strong growth

Debt Healthy balance sheet

Capital Needs conclusion

Umicore reduced its historically debt position in February 2018 by issuing 890m Euro of new capital. The proceeds were invested in the new Energy activities. Recently, joint projects were also set up in mainly in China. Umicore has followed a cautious debt policy in recent years. This has enabled it to respond quickly if interesting opportunities arose, such as the Delphi's bankruptcy in the last crisis.

0

100

200

300

400

500

600

700

800

900Capex

-100

0

100

200

300

400

500

600Net Financial debt

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000Working capital

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9Dividend

Solvency 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

NetDebt/EBITDA 0.9 0.6 0.8 0.5 0.5 0.5 0.9 0.9 0.8 -0.1 0.7 0.6 0.5

ONCLiab/ONCAssets 3.1 2.7 2.4 2.6 2.6 2.5 2.8 2.6 2.7 2.6 2.6 2.6 2.6

EBIT/Fin.Costs 3.5 2.4 80.1 398.1 7.2 6.4 34.3 7.0 15.3 8.5 29.4 16.5 8.6

Tangible IC/NetDebt 4.7 8.0 4.8 6.8 8.5 8.4 6.3 5.8 5.9 -48.6 6.9 7.2 8.7

NetDebt/Equity 0.3 0.1 0.2 0.2 0.1 0.1 0.2 0.2 0.2 0.0 0.2 0.2 0.1

Fin.Costs/Net Debt 23.2% 42.9% 1.1% 0.4% 21.5% 20.3% 2.1% 10.3% 5.1% -78.0% 3.6% 7.4% 19.1%


11

D. P&L and Balance Sheet tables with Cash Flow ratio’s

(Source: Company data, Valuescan.be estimates)

Price 36.57 EUR NOSH 246 MktCap 9,011 EV 8,996 Isin BE0974320526

Target 44.00 Debt -52 Minorities 37 CredRat 0.00 Code UMI

1. Profit & Loss

December 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Sales 2,456 1,595 2,206 2,751 2,490 2,394 2,335 2,635 2,673 2,916 3,568 4,208 4,829

Salesgrowth -35.1% 38.3% 24.7% -9.5% -3.8% -2.5% 12.8% 1.4% 9.1% 22.4% 17.9% 14.8%

Gross Profit 816 528 722 908 843 772 632 741 776 930 1,202 1,390 1,494

Gross Margin 33.2% 33.1% 32.7% 33.0% 33.9% 32.2% 27.1% 28.1% 29.0% 31.9% 33.7% 33.0% 30.9%

R&D

R&D%

SG&A 541 347 410 497 497 491 417 498 513 650 697 764 796

SG&A% 22.0% 21.8% 18.6% 18.1% 20.0% 20.5% 17.9% 18.9% 19.2% 22.3% 19.5% 18.2% 16.5%

EBITDA 381 291 431 537 483 421 345 388 417 473 700 809 947

Margin 15.5% 18.3% 19.5% 19.5% 19.4% 17.6% 14.8% 14.7% 15.6% 16.2% 19.6% 19.2% 19.6%

Deprec.& Amort. 107 110 119 126 138 140 131 146 154 169 201 215 232

Other Income 0 0 0 0 0 0 0 0 3 65 -6 -33 17

EBIT 275 181 311 411 346 281 214 243 265 345 499 594 715

Margin 11.2% 11.3% 14.1% 14.9% 13.9% 11.7% 9.2% 9.2% 9.9% 11.8% 14.0% 14.1% 14.8%

Financials -77 -76 -4 -1 -48 -44 -6 -35 -17 -41 -17 -36 -83

Pretax 197 105 307 410 298 237 208 208 248 304 482 558 632

Tax Rate -34% -20% -18% -19% -20% -22% -21% -23% -23% -25% -22% -22% -22%

Tax -67 -21 -54 -76 -60 -52 -44 -48 -56 -75 -106 -123 -139

Adjustments -9 -11 -4 -9 -4 -6 7 8 -61 -17 0 0 0

Net adj. 122 74 249 325 233 179 171 169 131 212 376 435 493

EPS adj. 0.53 0.33 1.10 1.43 1.05 0.80 0.79 0.78 0.60 0.97 1.53 1.76 2.00

# Shares 231 225 226 227 223 223 216 217 218 219 246 246 246

Dividend 0.33 0.33 0.40 0.50 0.50 0.50 0.50 0.60 0.65 0.70 0.74 0.76 0.78

Valuations

EV/Sales 1.4 1.7 1.4 1.8 1.8 1.7 1.7 2.0 3.1 2.4 2.0 1.7

EV/EBITDA 7.7 8.8 7.4 9.3 10.3 11.5 11.7 12.7 19.3 12.1 10.5 8.9

PE 28.0 13.8 11.4 18.3 23.0 21.5 24.9 37.9 43.5 23.9 20.7 18.3

2. Balance Sheet

ASSETS 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Tangibles 709 764 805 864 912 999 1,062 1,023 1,070 1,301 1,920 1,915 1,916

Intangibles 123 130 146 144 150 164 221 211 261 286 286 286 286

Other Fixed 103 125 147 143 164 166 169 161 175 183 183 183 183

Financial Assets 195 224 274 267 251 223 259 219 222 175 175 175 175

Non-Curr.A. 1,130 1,244 1,372 1,419 1,478 1,551 1,711 1,614 1,727 1,946 2,564 2,560 2,560

Inventory 899 860 1,183 1,305 1,235 1,106 1,183 1,054 1,189 1,628 1,776 2,016 2,127

Receivables 585 519 790 825 773 719 833 797 817 1,247 1,366 1,547 1,817

Cash 255 185 125 104 131 99 90 74 84 1,060 627 607 662

Other Current 156 19 42 60 51 36 35 491 328 127 127 127 127

Curr.Ass. 1,894 1,583 2,140 2,295 2,190 1,961 2,141 2,416 2,418 4,062 3,895 4,296 4,733

Total Assets 3,025 2,827 3,512 3,713 3,668 3,512 3,851 4,030 4,146 6,008 6,460 6,856 7,293

Equity 1,332 1,367 1,575 1,722 1,806 1,723 1,750 1,785 1,848 2,755 2,949 3,196 3,497

LT Debt 423 176 195 24 3 26 23 71 24 694 694 694 694

Other NC Liabil. 317 340 357 368 420 413 471 419 467 475 475 475 475

Non-Curr.Liabil. 2,072 1,883 2,127 2,113 2,228 2,162 2,244 2,275 2,339 3,923 4,117 4,365 4,666

ST Debt 166 186 290 347 351 288 366 339 401 314 401 401 401

Payables 603 610 895 1,039 976 913 1,079 1,003 1,098 1,536 1,707 1,856 1,992

Other Curr.Liabil. 184 148 199 214 112 149 163 413 307 234 234 234 234

Current Liabilit. 953 944 1,385 1,600 1,440 1,350 1,607 1,755 1,806 2,084 2,342 2,491 2,627

Total Liabil. 3,025 2,827 3,512 3,713 3,668 3,512 3,851 4,030 4,146 6,008 6,460 6,856 7,293

Cash Flow Variables

Net Debt 333 176 360 267 222 215 298 336 341 -52 468 488 433

Working capital 852 640 921 937 970 800 809 925 928 1,231 1,327 1,599 1,844

Inv/Sales% 36.6% 53.9% 53.6% 47.4% 49.6% 46.2% 50.7% 40.0% 44.5% 55.8% 49.8% 47.9% 44.1%

Rec/Sales% 23.8% 32.6% 35.8% 30.0% 31.0% 30.0% 35.7% 30.2% 30.6% 42.8% 38.3% 36.8% 37.6%

Pay/Sales% 24.6% 38.3% 40.6% 37.8% 39.2% 38.2% 46.2% 38.1% 41.1% 52.7% 47.9% 44.1% 41.2%

Capex/Sales% 7.1% 12.1% 7.8% 7.5% 10.7% 13.2% 10.4% 8.4% 7.8% 17.0% 23.0% 5.0% 4.8%


12

III. Valuation

DCF valuation range:

(Source: business plan estimates from previous chapters by Valuescan.be, these can differ from the actual results)

The DCF uses a Wacc of 8% to reflect average business and financial risks

Peers EV/EBITDA overview

Saved 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Salesgrowth 1.4% 9.1% 22.4% 17.9% 14.8% 20.0% 15.0% 8.0% 6.0% 4.0% 2.0%

Sales 2673 2916 3568 4208 4829 5795 6664 7197 7629 7934 8093

Oper.Margin 9.9% 11.8% 14.0% 14.1% 14.8% 15.0% 15.2% 15.2% 15.2% 15.2% 15.0%

Oper.Income 265 345 499 594 715 869 1013 1094 1160 1206 1214

Depreciation 154 169 201 215 247 296 341 368 390 405 414

WC changes -303 -95 -273 -236 -367 -330 -203 -164 -116 -60

Taxes -56 -75 -106 -123 -148 -180 -209 -226 -240 -249 -251

Capex -209 -497 -820 -210 -241 -290 -333 -360 -381 -397 -405

Free Cash Flow 155 -361 -321 203 336 329 481 673 764 850 912

Working Capital 928 1231 1327 1599 1836 2203 2533 2736 2900 3016 3076

Net Debt -52 309 629 427 90 -239 -719 -1392 -2156 -3006 -3918

Tax Rate -21% -22% -21% -21% -21% -21% -21% -21% -21% -21% -21%

WC/Sales 35% 42% 37% 38% 38% 38% 38% 38% 38% 38% 38%

Capex/Sales -8% -17% -23% -5% -5% -5% -5% -5% -5% -5% -5%

Deprec./Capex 74% 34% 25% 102% 102% 102% 102% 102% 102% 102% 102%

Free Cash Flow -361 -321 203 336 329 481 673 764 850 912

Discount Factor 1.000 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500

Discounted Flows -361 -297 174 267 242 327 424 446 459 456

Horizon Value 2,042

Terminal Value 7,753 Sensitivity Base Case

- net debt (52) Rg/WACC 8.5% 8.0% 7.5% WACC 8.0%

Equity Value 9,847 1.5% 34.6 38.0 42.0 LT Growth 2.0%

Nr Shares 246 2.0% 36.7 40.5 45.1

HV/TV Ratio 21% 2.5% 39.2 43.6 48.9 Target Price : 40.5Fin.Assets/Minorities 138

0.0

5.0

10.0

15.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Historic EV/EBITDA

UMICORE Minerals Technologies

Wacker Chemie AG Johnson Maty


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Contents and methodology

I. Company Description Brief company history to situate the roots and recent material events.

Description of the activities in the reported segments that are used for the business model.

The necessary background for investors to understand what the company does.

II. Sector Overview Description of the market environments in which the company operates.

Expectations of market growth potential and market share trends.

The necessary sector background for investors to understand the business model.

III. Business Model

Value = Growth x Profitability / Capital needs

A. Growth Expectations The growth expectations are modelled by reported segment on a 10y history and 3y forward.

The long term drivers by segment are evaluated, company expectations vs. sector dynamics.

Recent results are discussed and a growth conclusion is discussed with the segment table.

B. Profitability The profit margins are modelled by reported segment on a 10y history and 3y forward.

Competitive situation and operating costs are discussed per segment, peer comparison.

Profitability conclusion in a segment EBIT table, including corporate or exceptional costs.

C. Capital Needs Equity reports often spent too little attention to the capital needs to realise growth and profitability.

Hence, Capex, Working Capital, Debt and Dividends are discussed.

The Capex is modelled towards the maintenance level at the end of the 3Y forecasting horizon.

IV. Valuation We use a DCF to translate the future free cash flows into a fair value estimate.

The WACC is set at 8% for all companies as our expected return for the Equity investor.

ValueScan.be measures value with the same yardstick, independent of noise or hype.

For companies with higher risk profiles, a higher WACC is possible and will be justified.

A ROIC analysis backtests the valuation with an EVA analysis. The historic Equity value is compared to

the historic EVA calculation. This indicates whether the market has been over- or undervaluing the

company in the past.

http://www.valuescan.be/Salesgrowth

http://www.valuescan.be/ProfitMargin

http://www.valuescan.be/CapitalNeeds


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Disclaimer : The Valuescan.be document is not an investment recommendation. The Valuescan Document has been prepared solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Valuescan Document do not constitute investment advice and independent advice should be sought where appropriate. The information provided on this Valuescan Document or in any communication containing a link to this Valuescan Document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Valuescan.be to any registration requirement within such jurisdiction or country. Neither the information, nor any opinion contained in this Valuescan Document constitutes a solicitation or offer to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

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