APD
Air Products and Chemicals Inc.
Industrial/Transportation, Event Driven/Special Sit
07/10/2014
Presented
| Date | 07/08/2014 |
| Price | $128.58 |
| Market Cap | $27.30B |
| Ent Value | $33.61B |
| P/E Ratio | 21.1x |
| Book Value | $34.31 |
| Div Yield | 1.9% |
| Shares O/S | 212.28M |
| Ave Daily Vol | 1,110,000 |
| Short Int | 1.04% |
Current
| Price | $323.23 |
| Market Cap | $71.86B |
| Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. The company operates through four segments: Merchant Gases, Tonnage Gases, Electronics and Performance Materials, and Equipment and Energy. The Merchant Gases segment sells atmospheric gases, such as oxygen, nitrogen, and argon; process gases comprising hydrogen and helium and carbon dioxide; and medical and specialty gases for the metal, glass, chemical processing, food processing, healthcare, steel, general manufacturing, and petroleum and natural gas industries. The Tonnage Gases segment offers hydrogen, carbon monoxide, nitrogen, oxygen, and syngas to the energy production and refining, chemical, and metallurgical industries. The Electronics and Performance Materials segment provides nitrogen trifluoride, silane, arsine, phosphine, white ammonia, silicon tetrafluoride, carbon tetrafluoride, hexafluoromethane, critical etch gases, and tungsten hexafluoride; and tonnage gases, chemicals mechanical planarization slurries, specialty chemicals, and services and equipment for the manufacture of silicon and compound semiconductors, and thin film transistor liquid crystal displays. This segment also offers performance materials for a range of products, including coatings, inks, adhesives, civil engineering, personal care, institutional and industrial cleaning, mining, oil refining, and polyurethanes. The Equipment and Energy segment designs and manufactures cryogenic equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and helium distribution; and provides plant design, engineering, procurement, and construction management services for the chemical and petrochemical manufacturing, oil and gas recovery and processing, and steel and primary metals processing industries. Air Products and Chemicals, Inc. was founded in 1940 and is headquartered in Allentown, Pennsylvania. |
Publicly traded companies mentioned herein: Air Products & Chemicals Inc. (APD), Airgas Inc (ARG), Canadian Pacific Linde AG (LIN GR), Praxair Inc (PX), Rockwood Holdings (ROC)
Highlights
The presenter thinks the opportunity on the long side of Air Products (APD) is better now than when Bill Ackman’s Pershing Square announced its activist position. CEO John McGlade announced his retirement in September (2013), and his last day is scheduled to be June 30. He will be replaced by Rockwood Holdings’ CEO Seifi Ghasemi effective July 1, and the market applauded the move (shares jumped ~8% on the news). The presenter thinks Ghasemi is an excellent choice for the job, as he not only helped Rockwood shed assets, but also has experience as president of BOC Gases (he noted that APD tried to acquire BOC during Ghasemi’s tenure, but the bid was unsuccessful and the company was ultimately bought by Linde) and should be able to rectify a number of cost-related issues facing APD. At present levels (~$128), the risk/ reward is attractive as there are multiple scenarios yielding price targets ranging from $150-200 (over the next 12-24 months) depending on how aggressive the assumptions made are.
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