Johnson Matthey (JMAT) £37.45

Gain to date: 22.1%

Original entry point: Buy at £30.66, 21 December 2017

Encouraging annual results from chemicals group Johnson Matthey (JMAT) have helped the shares to rise further.

Johnson Matthey develops catalytic converters to reduce emissions from cars; it creates active pharmaceutical ingredients for treatments; and offers solutions to improve agricultural production.

There was robust trading in the year to 31 March 2018 despite pre-tax profit falling by 1% on a constant currency basis to £486m.

The standout performance was the clean air division as heavy duty diesel and light duty sales supported a 9% jump in revenue to £2.45bn.

Significant progress was achieved for Johnson Matthey’s enhanced lithium nickel oxide material (eLNO), which could potentially disrupt the market with higher energy density and lower cobalt usage. The company is doubling capacity at its battery materials demonstration plant to 1,000 tonnes.

The market has valued Umicore’s automotive battery business at €3bn, but Johnson Matthey’s battery operations have been given virtually zero value. One explanation is that Umicore addresses today’s market, but Johnson Matthey is targeting next-generation materials such as eLNO where production is not expected to start until 2021-2022.

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