Air Products Wins Supply Contract From Samsung Electronics
Air Products and Chemicals Inc. APD has been awarded a new contract to supply industrial gases for Samsung Electronics’ second semiconductor fab in Xi'an, Shaanxi Province, western China. Notably, the Xi'an fabrication line is one of Samsung's largest overseas investments and one of the most advanced fabs in China. It makes three-dimensional (3D) vertical NAND (V-NAND) flash memory chips for a vast range of applications.
Since 2014, Air Products has been housing two large air separation units (ASUs) — a hydrogen plant and a bulk specialty gas delivery system — to support this latest project. Per the new contract, the company will expand its existing site by building several large ASUs, hydrogen and compressed dry air plants, and a bulk specialty gas supply yard for supplying ultra-high purity nitrogen, oxygen, argon, hydrogen and compressed dry air to the new fab. The project is scheduled to be operational in 2019.
Air Products’ shares have moved up 17.1% in a year, underperforming the industry’s 19.7% gain.
In first-quarter fiscal 2018, the company reported adjusted earnings of $1.79 per share, up 22% from the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of $1.66. Meanwhile, revenues were $2,216.6 million, up around 18% year over year. The top line outpaced the consensus mark of $2,159.2 million.
For fiscal 2018, the company anticipates adjusted earnings in the range of $7.15-$7.35 per share, up 13-16% from the prior year. The guidance includes an expected benefit of 20-25 cents per share from the U.S. Tax Cuts and Jobs Act. For the fiscal second quarter, Air Products expects the same in the band of $1.65-$1.70 per share. Also, it projects capital expenditure of $1.2-$1.4 billion for the current year.
Air Products has built a strong project backlog. These projects are anticipated to be accretive to earnings and cash flow over the next few years. In addition, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018. The company also remains on track with delivering on cost-reduction programs, which is likely to support margins.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote
Zacks Rank & Key Picks
Air Products carries a Zacks Rank #2 (Buy). Some other top-ranked stocks worth considering in the chemical space are Methanex Corporation MEOH, Huntsman Corporation HUN and BASF SE BASFY.
Methanex has an expected long-term earnings growth of 15% and a Zacks Rank #1 (Strong Buy). Its shares have rallied 19.6% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntsman has an expected long-term earnings growth of 8.3% and a Zacks Rank #2. Its shares have surged 58.7% in a year.
BASF has an expected long-term earnings growth of 8.9% and a Zacks Rank #2. Its shares have gained 19.1% over a year.
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