Shares of Air Products & Chemicals Inc. (APD) touched a new 52-week high of $149.61 on Dec 26, 2014, before eventually closing at $149.12.
The industrial gas giant’s year-to-date return is roughly 25.8%, much higher than the S&P 500’s total return of 15.3%. Average volume of shares traded over the last three months is roughly 1,608K.
What’s Driving Air Products Up?
Air Products’ fiscal fourth-quarter adjusted earnings beat the Zacks Consensus Estimate. Sales rose in the quarter as a decline in the Tonnage Gases division was offset by gains in other businesses. Revenues in the core Merchant Gases segment were driven by higher volumes in key regions and positive pricing in U.S./Canada, Europe and Latin America.
Air Products is also gaining from incremental opportunities in the liquefied natural gas (“LNG”) market. The company has been chosen for a major off-shore LNG project in Malaysia, representing a key milestone for its LNG technology and equipment.
The company also landed an equipment and process license agreement with PETRONAS Floating LNG 1 Ltd., a fully-owned unit of Malaysia’s national oil and gas company Petroliam Nasional Berhad. Approximately 1.2 million tons of LNG is expected to be produced annually from the PETRONAS LNG Project when it comes online in late 2015.
Moreover, with growing demand for LNG technology and equipment, Air Products has constructed a new manufacturing facility in Manatee County, FL. This facility will expand its LNG manufacturing capacity and meet the demand for its large LNG heat exchangers.
Electronic gases remain the primary growth driver for Air Products, with strong demand in the liquid crystal display (“LCD”) market. Refinery hydrogen has a tremendous opportunity, where refiners are required to meet lower sulfur specifications. Air Products’ primary focus is on refinery hydrogen, which yields 30% of its revenues. Over the next 10 years, the company expects increase in global hydrogen demand and has a number of refinery projects in the pipeline.
Given its leading position in the gases business, Air Products is well positioned to capitalize on the cyclical recovery in its core industrial end-markets. It has sufficient capacity to meet the expected upturn in demand without incurring additional capital expenditures. The company has built a $3.5 billion project backlog. These projects are expected to be accretive to earnings and cash flow as they come on stream over the next few years.
Air Products is also working with Hyundai Motor Company Australia (“HMCA”) for fueling the latter’s first hydrogen-powered car. Hyundai’s hydrogen-powered zero-emission fuel cell electric vehicle (“FCEV”), Hyundai ix35, will be imported to Australia to demonstrate its technological advantages. Air Products is working with Hyundai and other vehicle manufacturers to expand its footprint in the hydrogen fueling market globally.