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Dow (DOW) Inks MOU to Set Up South China Specialties Hub

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Zacks Equity Research
·3 min read
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Dow Inc. DOW announced the signing of a Memorandum of Understanding (“MOU”) with the Zhanjiang Economic and Technological Development Zone Administrative Committee to establish the Dow South China Specialties Hub. The Hub will be a multi-year project, which will give customers local access to Dow’s portfolio of high-value products and innovative technologies.

This latest manufacturing hub will help Dow widen its local reach, increase its supply reliability, enhance responsiveness to market needs and customized innovation. It will also enhance customers’ chances for success in markets, including automotive, pharmaceuticals, cleaning chemicals, apparel, lubricants and adhesives.

This project aligns with Dow’s emphasis on low capital intensive, fast payback and high return growth projects. Per the MOU, the company will invest roughly $250 million to build specialty polyurethanes and alkoxylates facilities, with a total manufacturing capacity of around 250,000 tons. The site also offers scope for future development and expansion at the Specialties Hub.

The hub, which will be located at Donghai Island in Zhanjiang, will enable Dow to cover demand across Asia Pacific. It will be characterised with advantages such as deep water port, transportation networks as well as a world-class chemical park with advanced infrastructure and services.

Shares of Dow have surged 57.1% in the past year compared with 46.8% rise of the industry.

Dow, in its last earnings call, noted that it entered 2021 with momentum on a sequential comparison basis and is well-placed for sustained profitable growth amid the ongoing economic recovery.

The company expects rising margins as differentiated parts of its portfolio witness improving demand on market recovery. Dow also expects to deliver significant value through innovation and operational efficiencies. Moreover, the company is benefiting from improving cost structure, financial flexibility and its low-cost operating model.

Dow Inc. Price and Consensus

Dow Inc. Price and Consensus
Dow Inc. Price and Consensus

Dow Inc. price-consensus-chart | Dow Inc. Quote

Zacks Rank & Other Key Picks

Dow currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, BHP Group BHP and Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of 95.4% for the current fiscal. The company’s shares have surged around 174.5% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP has an expected earnings growth rate of 69.2% for the current fiscal. The company’s shares have gained 82.1% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 186.9% for the current fiscal. The company’s shares have rallied around 97.7% in the past year. It currently carries a Zacks Rank #2.

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