Air Products (APD) Clinches Jiutai Syngas Supply Contract

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Air Products and Chemicals, Inc.APD has won a long-term onsite contract to supply syngas for the multi-billion-dollar mono-ethylene glycol project of Jiutai New Material Co. in Hohhot, China. The project is expected start in the fourth quarter of fiscal 2021. Air Products expects the project to add more than 20 cents to its earnings per share starting fiscal 2022.  

Per the contract, Air Products will build, own and operate the air separation, gasification, and gas clean up processing facility and is set to invest roughly $650 million for the same. The plant will include the recently-acquired Shell gasification technology.

The facility, to be designed to produce more than 500,000Nm3/hr of syngas, will include five gasifiers, two air separation units (ASU) of approximately 100,000nm3/hr with syngas purification and processing along with related infrastructure and utilities.

Air Products, last month, raised its adjusted earnings guidance for fiscal 2018. It now anticipates adjusted earnings per share in the range of $7.40 to $7.45 (a 17-18% increase from the prior year level), up from the earlier view of $7.25 to $7.40. The company expects adjusted earnings in the band of $1.95 to $2.00 for the fiscal fourth quarter, up 11-14% year over year. It also foresees capital expenditure of $1.8-$2 billion for fiscal 2018.

Coming to stock performance, Air Products has outperformed the industry in a year's time. While shares of the company have moved up around 14.4%, the industry saw a rough 6.7% rise.

The company has a capacity to deploy at least $15 billion in high-return investments over the next five years, which will boost shareholders' value.

Air Products also has a strong project backlog. The projects are anticipated to prove accretive to earnings and cash flow over the next few years. Moreover, strategic investments in high-return projects, new business deals and acquisitions are likely to drive fiscal 2018 results.

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 is a Zacks Rank #2 (Buy) stock.

Some other top-ranked companies in the basic materials space are Huntsman Corporation HUN , Celanese Corporation CE and LyondellBasell Industries N.V. LYB .

Huntsman has an expected long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). The company's shares have rallied 22.2% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

Celanese has an expected long-term earnings growth rate of 10% and a Zacks Rank #1. Its shares have gained 18.9% in a year's time.

LyondellBasell has an expected long-term earnings growth rate of 9.5% and carries a Zacks Rank #2. The stock has rallied 28.4% in a year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: APD , CE , HUN , LYB

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