Umicore Stock Analysis - Battery & Recycling Stock!
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- เผยแพร่เมื่อ 27 ก.ย. 2024
- Umicore is a Belgian stock that is down 75% since the battery stocks boom. However, it looks cheap from various perspectives and in relation to the potential it offers.
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Sven you miss the most important point here: Umicore has bet huge on NMT batteries whit large investments and facilities while all ev makers are looking more and more to towards LFP batteries, which are a lot cheaper. Unfortunately Umicore can’t produce these.. This is the key problem, not slowdown in ev sales, which is temporary. Umicore just bet wrong.
thanks for sharing - great point!
Shit
For me 😂
How you find the time and the courage to respond to all these comments blows my mind ! Most are just full of it
Great video again.
hahaha, that is true!
I am cheering for Croatia in the Euro's because of you Sven! they need a win!
you know I don't watch football :-)
the problem is that they focused on the wrong type of batteries for ev, as in not the cheaper ones used more and more
Thanks for the video Sven! This company reminds me a whole lot of one of my favorite companies from my local stock exchange - Elkem on Oslo Stock Exchange! As a producer of silicons and silicon materials, Elkem is also down with this EV/battery downturn, and is currently selling at a seemingly ridiculous 0.5 price-to-book and at a 1.3x it's 2022 cyclical high earnings. Elkem seems to me like a really good oppurtunity for some counter-cyclical value investing. Any inputs on this? A video on Elkem would also be amazing!
an interesting one, thanks for sharing!
One possible headwind for future car sales may be higher interest rates than they have been in the past decade. For some buyers, it will make a difference whether they finance at 4% or 6.5%. Moreover, for example in the EU, where car prices have risen in a non-market way thanks to emission allowances. How this will affect car sales I'm not sure.
that is correct
You forgot to mention that the Belgian state recently bought into the capital, which further accelerated the fall of the stock. I think it's important to say that (also, it will play a role in case of problems with the lead).
thanks for sharing!!! Good points!
Hey Sven, thanks for this analysis. I have Umicore in my checklist, I have nibbled at 12 Euros and the stock price is going down hard (10.54 currently). Just wondering if you have updates as I can't find any news related to the company and the decline of the stock price seems a price action only. Many thanks!
Lithim prices continue to decline
Thx Sven! Definitely do that deep dive in 4 or 5 months thatd be great!!!
we will see how it evolves, no promises....
ALTM just keeps going down. Is there maybe to have update on that?
it would be very interesting
will have to, but I told you to watch the cycle until 2027
Brilliant video. Thank you Sven.
Glad you enjoyed it
Hey Sven, can you please analyze the UK listed Reckitt benckiser
thanks for suggesting!
You can battery swap Nio cars in 3 minutes.....
And its cheaper then disel or petrol. Less noise, less problems with car,
alot of time saved going in and out off workshops to fix things.
yes, and do I have to drive to China to swap?
Lol @@Value-Investing
hi love your videos, could you do videos on Carl Zeiss meditec (AFX) and Corning (GLW)
Corning is a cyclical, watch that. Don't know about the other
AFX makes lens for ASML machines
Further in the Belgian market, there is also Barco who lost a lot of it's valuation. If they deliver on their promises of growth, this might be interesting... But yes promises
thanks for sharing, I might dip into the Belgian market...
You’re brilliant great pick with great dividend.
it is not a pick, just an analysis
Yeah, you chose a stock that is in my portfolio 🎉
why is it there?
@@Value-Investing I am overweighting the special materials and related sectors. I expect demand to rise sharply and supply to grow more slowly. Based on these assumptions, the share is favorably valued.
The recycle batteries not used anymore
There are a number of things to like here, trading for exactly tangible book value and can make 10%+ ROE on a conservative balance sheet ... but the operating margins are razor thin, and any small hiccup can turn that negative. Op. margins are actually on the higher end (3.5%) than their average of 2.5-3.0% over the last 20 years, and so if we went back to average you slash Op. income by up to almost a third, and thus, no longer that cheap on an earnings basis. Also, those small hiccups are more likely in a business like this building highly technical advanced battery plants ... no simple business here, and levering up to do this build-out ... obviously that's something you have to do in an industry like this, but it takes away the things I like about the business, mainly the conservative balance sheet ... I'm always worried about the big recession that never seems to come.
one day it will come, but who knows when
3M and Umicore have been total trainwrecks when it comes to polluting their sites and local communities with either foreverchemicals or heavy metals. Antwerp is the second largest chemical cluster in the world and has some of the strictest environmental laws in the world and still this happens. My colleague's house is in the PFOS contaminated area near the 3M site. We asked him if he didn't notice the eggs from the chickens in his garden had built in antistick properties when frying them in a steel pan. 😅
:-)))
Hi Sven
I believe that HSBC is a very good stock to own at the moment. What are your thoughts?
Banks are not my circle of confidence
If you like European stocks do Schneider, its one of the biggest companies in Europe. :)
.. Electric .. indeed great company ( I watched go up for 2+ years )
too expensive for me, Sven or other value investors ;(
@@laurent77 but maybe to give some fair value tip or something..I am also thinking that current entey point is high..
guys, wait for a recession in Europe
@@Value-Investing just Europe or wait with investing in USA stocks also?
Would you be willing to do a video on how to analyse industrials specifically on what to look out for with inventories, FIFO vs LIFO and commodity prices and hedging so that we can be sure we're not coming in at the wrong time of the cycle.
Thanks in advance, your videos are super helpful.
Everytime Sven says ebita replace it with bs earnings
It’s strange how that word makes a pain in an ear.
Yea but although it’s catchy to say that because Charlie said it you have to understand that EBITDA is a main factor in a lot of business. Yes if you have owned a company since inception and you have paid for the depreciation upfront then it doesn’t really mean anything but if you are buying a company that comes with huge depreciation on its balance sheet that you are not paying for then it is advantageous as the cash flows will be higher and you won’t have paid for the depreciation.
in this case I have to use what is there, and often these businesses in Europe sell at an EBITDA multiple, but yes, you are correct on the BS
PE ratio is analogous to product ratings or reviews on Amazon. Good products have many positive/5 star reviews, just like how good stocks have high P/E ratios. When you buy a stock with a P/E of 8, you are essentially buying a product with terrible reviews, hoping that everyone else who bought it was wrong. Sometimes it works out like that, but it usually doesn’t
It's not that easy...
Remember when Apple had a PE ratio of 10 in 2008?
You are a smart man, not many people understand
you can still make money from a terrible company if it ends up being less bad than the market expected. everyone knows good companies are good and bid up the price above fundamentals the opposite happens with bad companies with low PE
@@travismonk2804 sometimes certain stocks can be mispriced, for sure. However if your entire strategy is to buy low P/E stocks then you’ll end up with 95% duds
Great analysis!
Thanks!
Seems extremely risky with this lead problem. But I love these boring businesses.
I don't know how to weigh it, maybe it is not an issues, this is not the USA
I thought solid state batteries are still not proven at scale?
we will see, I don't know!
Not everything that's cheap is a bargain, Sven. Check further down the thread ...
yes, check the video :-)
@@Value-Investing Nope, not checking the video. We've done our own research and found that Umicore's future stock performance isn't interesting to us, even when considering compound interest.
if you set battery on 0 value its 14 euro worth.
thanks for sharing!
The "Lead" situation is a no no for me. Sooner or later lawsuit is coming in.
thanks for sharing!
🗽 For me also the ICE car is the better choice. An BEV is an expensive toy, maybe a second car for the city. 🤔
.
Most people that can afford a new car have 2 cars.
it depends how much and where you drive, my wife loves the electric home charging
I heard about this company but I am just not sure.
:-)
What about panasonic as possible investment? This one look nicely priced. And long term contracts with toyota looks to guarantee cashflow.
thanks for sharing!
Mmm yes, Nvidia should be the HIGHEST market cap in the world. I don't see aaaaanything wrong with that. But hey, nothing happened to the large tech companies that would change the world in 2001 right?
:-))
4:20 what you said makes no sense. It takes 5 minutes to fill a tank of gas and it takes 0 min to charge your car over night at home. You will never go to the gas station again saving time. The 2 to 3 week car vacation or road trip is the only time this is not true. And then it's a hassle. So long term you save hundreds of hours over the life of your car.
depends how much you drive, we have one electric and one ice
Seems like a long play
4x return for significant risk
The problem of Umicore is they bet the growth on their new battery division, means anode/cathode materials, but unfortunally the roll out of EV is not a straight forward business, since german, french automakers are finding that out, prices of cars have increased during a time of higher inflation and borrowing cost. Majority of their income come from catalyst, mean majority also connected to metals for filters (heavy duty diesel, ICE motors) and so on, in some of their reports they also point out that the demand is driven by strong demand in china heavy duty transports, which i found last year coming back to china, that there was a major shift in transportation, since i saw that 1/4 or 1/3 of heavy duty trucks were converted from diesel to LNG, here means that they dont need much of PMG metals for filter... so less market on this side. Today they said that will cut 14% of workforce on german plant cause that they see that EU will not enforce the new legislation on emotions, meaning dont need so many PGM metals on each car...
To the bright side i see the metal recycling business that will be and hedge on metal inflation. I am down quite a bit, but i think i will add some on this low price to decrease my average cost. They also supply and are the only European supplier of almost all critical metals, which instable geo politic can be plus on a higher rating from the market.
The dividend seems attractive but in Belgium they have a 35% on tax + we need to pay local tax from other EU country.
thanks for sharing! very good points!
Great analysis.
I bet I use waaay LESS time on an annnual basis keeping my car charged than you at the gas-station. You are misunderstanding the value proposition.
hm, interesting point, but my wife has the electric I have the gas one - but I drive a bit more, it would not be possible to have an electric for me...
An electric vehicle makes only sense if you can charge it at home, and you commute with your car.
@ayo9057 Commute --> Regular shorter distances. Because EV cost more to buy and profit from lower km-costs. Therefore, you profit if you use your car often and not only for holidays or a weekly shopping trips. As a Dutch person, he probably uses his bicycle as his main transportation vehicle.
we have one electric and one not - that works ok
@ayo9057 When you don't commute and, like me, drive about 800 km a month, petrol would be ~ 80€ (Germany). I have a >10 year old car, so no depreciation, self service oil and filter change and no need for insurance.
Getting a new EV would cost me at least 300-400€ in depreciation or leasing rate plus I have to insure the high value of the car. And my 800 km would still cost me ~ 45-50€ loading.
For the past 10 years my car's expense was about 230 € /month in total (Golf 7 Variant). Try that with any EV....
Huh? Just like your gasoline car that you used to fill at home?
@@ifwecouldvote Filling up a gasoline car is faster, and I assume filling it up at home would cost more. At home, charging is cheaper and if you use it a lot, the lower per km price can work in your favor.
Good video Sven. Any interest in Natural Resource Partners (Something in your Circle of competence) ?
Hello, Sven! Another great analysis. Thank you for it. I was surprised by the transparency on the company's website and a very positive factor was the list of analysts with mostly sell recommendations. I'm looking for exposure to PGM's and I think this is a good place to start. Thanks again.
Glad it was helpful!
-42.13% YTD -47.33% 1Y -46.73% 5Y
These are some nightmarish returns... 😬
...but as Buffet famously said: "by greedy when others are fearful!" 😉
that is the battery boom and bust, the business is continuing on its path, we will see
Shout out to Erin Brockovich! Wooo! Make corporations pay their external costs if you want capitalism to truly function! YES! Wooooooooo
:-) Lead in children's blood is a bit too much
they are probably more a thermic engine company: a part of their business is related to metals used in cars's catalytic converters. I like the business but i am going to stay away of this.
thanks for sharing
Very interesting situation and a great overview! Thank you.
The three areas that could hold bad surprises:
- "tech investing" - both buying their stock and what their management invest in internally could get disrupted and then whats left are the 4% distributions and the debt
- macro - the guess is for the market to boom and they are investing in preparation and probably assuming returns on future capacity based on current (or even inflating) prices, but if everyone is doing this and the macro is not as great then it could end up as your summary of Newman - always great investment plans and projections and never the return
- the real value of growth - as per Bruce Greenwald - growth without moat might be neutral or even negative for value creation (if the internal investment IRR is close or below capital cost)
thanks for sharing
As you kinda pointed out, dont invest in an company that no one wants its products and has to rely on massive government subsidies and government force to "sell" their products.
Yes, EVs does anybody want one? I don't like auto companies and auto suppliers in general, except perhaps for Toyota and Honda, and they are expensive stocks.
thanks for sharing!
@brianlarson8088 well EV are everywhere sooooop....
Thanks! Very informative! Do you actually know a book that analyzes business models in different sectors of the economy?
Not that I know of
@@Value-Investing Do you, e.g., understand why companies like Louisiana-Pacific Corporation made a lot of money when timber was very expensive? I would have expected the opposite. It must have something to do with the ability to pass the cost of inputs to the customer, and that may have something to do with the business model and the industry.
How about Bekaert SA
don't know about them
Thanks, Sven!
My pleasure!
Great video, i appreciate that you are focusing on EU stocks as well! The solar and battery sector has been horrible. It will be interesting to see if insiders buy the stock after such a beatdown.
thanks!