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Air Products to Supply Industrial Gases for China Project

Zacks Equity Research
Updated

Air Products and Chemicals Inc. APD signed a supply agreement with a subsidiary of Shanxi Jincheng Anthracite Coal Mining Group. Per the deal, the company will supply industrial gases to Phase One of Shanxi Jinmei Huayu Coal Chemical Co Ltd.'s (Jinmei Huayu's) coal-to-clean-fuels project in Jincheng City, Shanxi Province, China.

Prior to this, Air Products landed an equipment-sale agreement with Jinmei Huayu to supply two air separation units (ASUs) with a total capacity of over 4,000 tons per day for this project that uses coal to produce clean fuels.

The company now, under a long-term supply agreement, intends to buy back the two ASUs for around $100 million and supply industrial gases via pipelines to Jinmei Huayu. The deal is however, subject to finalization of a buy-back agreement and government and regulatory approvals. The ASUs are expected to come online by mid-2018.

Air Products has underperformed the industry it belongs to over a year. The company’s shares have moved up 8.6% over this period, compared with roughly 20.8% gain recorded by its industry.

 

Air Products expects adjusted earnings per share of $1.60-$1.70 for first-quarter fiscal 2018, up 9-16% from the year-ago quarter. For fiscal 2018, Air Products expects adjusted earnings per share of $6.85-$7.05, up 9-12% year over year.

Air Products has a strong project backlog and benefits from actions to cut operational costs. Moreover, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018.

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Air Products and Chemicals, Inc. Price and Consensus

 

Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote

 

Zacks Rank & Other Stocks to Consider

Air Products currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO, Koppers Holding Inc. KOP and Westlake Chemical Corporation WLK, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have rallied 112.7% year to date.

Koppers has expected long-term earnings growth of 18%. Shares of the company have gained 21.1% year to date.

Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have soared 79.8% year to date.

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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
 
Kronos Worldwide Inc (KRO) : Free Stock Analysis Report
 
Koppers Holdings Inc. (KOP) : Free Stock Analysis Report
 
Westlake Chemical Corporation (WLK) : Free Stock Analysis Report
 
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