KBR on a Contract-Winning Spree, Inks BPA Project in China
KBR, Inc. KBR received a contract from Hainan Huasheng New Material Technology Co., Ltd. (Hainan Huasheng). The company will license Mitsubishi Chemical Corporation's (MCC) proprietary Bisphenol A (BPA) technology for a new plant in Dongfang City, Hainan Province, China.
Per the contract, KBR will provide Licensing and Basic Engineering Design (LBED) package as well as commissioning, startup support and training services to Hainan Huasheng for building a grassroots 240,000 tons per annum BPA plant.
Contract Wins &Technology Solutions Bode Well
Recently, KBR received a contract from Shenghong Refining Petrochemical (Lian Yun Gang) Co. Ltd., China to provide Vinyl Acetate Monomer (VAM) technology. The company also announced its integration with Chevron Lummus Global’s LC-MAX technology to support Hindustan Petroleum Corporation Limited’s modernization project at the Visakh refinery in India.
During third-quarter 2019, the company received a Purifier license and basic engineering design contract for the largest grassroots ammonia plant designed by KBR that primarily featured energy efficiency, flexibility and lower capital costs. Notably, Technology Solutions segment’s revenues increased 18.5% year over year in the third quarter.
We believe that the company’s Technology Solutions segment will continue to benefit from contracts win, which will drive the company’s top line.
Technology Solutions segment has been performing well, driven by refining and petrochemicals projects in China, India and Africa as well as strong technologies demand. The Technology Solutions segment recorded 48%, 29% and 19% organic growth in the first, the second and the third quarter of 2019, respectively. The results were primarily backed by strong execution across chemical, petrochemical, refining and ammonia projects as well as higher proprietary equipment sales. The company expects global technology opportunities led by ammonia, refining and olefins projects to continue.
Courtesy of robust contribution from the company’s businesses, shares of KBR have surged 101.8% so far this year compared with the industry’s 26.2% rally.
Zacks Rank & Key Picks
Currently, KBR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector are Gates Industrial Corporation plc GTES, Quanta Services, Inc PWR, and Martin Marietta Materials, Inc MLM, each sporting a Zacks Rank #1.
Gates Industrial’s earnings surpassed estimates in two of the trailing four quarters, the average being 12.1%.
Quanta Services’ earnings for 2020 are expected to rise approximately 21.5%.
Martin Marietta has three-five year expected earnings per share growth rate of 11.2%.
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