Praxair (China) Investment Co. Ltd, the Chinese unit of Praxair Inc. (PX) and a leading industrial gas supplier, signed a long-term industrial gas supply contract with Shanghai Hua Li Microelectronics Corporation.
Praxair China will be supplying ultra-high-purity oxygen, nitrogen, argon, hydrogen and helium for Hua Li’s 12-inch integrated-circuit chips production line. Situated in Shanghai’s Zhangjiang High-Tech Park, Hua Li Microelectronics is a state-owned company engaged in the production of advanced integrated circuits.
The contract will further strengthen Praxair China’s foothold as a leading industrial gas supplier in Zhangjiang High-Tech Park. The company will be required to expand its existing pipeline in the park complex to supply the gases for the project.
Praxair is a premier industrial gas supplier in the Americas and internationally. The company’s intense focus on expanding its reach within its operating regions and adding new customers has accelerated its profit growth, which should continue in the future. Furthermore, Praxair stands well positioned to benefit from the favorable economic environment, given its broad end-market exposure to food and beverage, steel, glass and chemicals.
However, Praxair’s large international presence increases risks related to fluctuations in foreign currencies and geopolitical uncertainties. Also, volatility in energy prices enhances risks of energy supply in adverse economic conditions.
Praxair expects diluted earnings per share to be in the range of $1.15 to $1.20 for the third quarter of 2010 and between $4.60 and $4.70 for
full-year 2010. Total revenue for full-year 2010 is expected to be approximately $10.0 billion.
Praxair faces stiff competition from Air Products and Chemicals Inc. (APD); Airgas Inc. (ARG); Linde AG (LNAGF.PK); Chromalloy Gas Turbine Corporation and Bodycote (BOY.L). We are currently maintaining a Neutral recommendation on Praxair, which is supported by Zacks # 3(Hold) Rank.
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