Flowserve Corporation (FLS) has won three contracts for supplying isolation valves to China Nuclear Power Engineering Company Ltd. These are expected to be utilized at Yangjiang, Fangchenggang and Ningde locations.
The valves are fast response, energy actuated valves and are expected to close the gateway within 3–5 seconds of rupture in the connected steam pipe.
The valves will be manufactured at North Carolina, and are scheduled for delivery in 2011 and 2012.
China Nuclear Power Engineering Company Ltd. plays an integral part in nuclear energy management in China. It constructs, manages and supervises industrial and civil projects, including nuclear power projects.
Over the last several years, emerging markets around the globe have been investing in infrastructure projects. These new projects include power generation plants, water treatment systems and mining. This build-out requires process controls in oil and gas, chemical and water markets—all of which are Flowserve’s core businesses. Moreover, Flowserve is benefiting from an ageing infrastructure that needs to be upgraded to meet new environmental standards and demand.
Flowserve has expanded its business across the globe, and revenues outside North America at present account for more than 60% of its total revenue. This diversification strategy should help mitigate the impact of an economic downturn in any one of the industries or countries that it serves.
There are increasing signs of stabilization in the end-markets, notably China, India, Brazil and the Middle East. We continue to believe that the long-term secular spending drivers in power, water and oil & gas remain firmly in place. While the industry has continued to see pricing pressure and lower volumes, companies like Flowserve, which have strong technical capabilities, good execution skills and strong balance sheets , have been able to maintain a sound performance. We also believe that they have expanded market share.
The company sells its products in highly-competitive markets, which stretch profit margins and pressurize market share. The company may be unable to deliver significant backlog on time, which could affect its revenues, future sales & profitability and relationships with customers.
Flowserve develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals for critical service applications that require high reliability. The company uses its manufacturing platform to offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting. The company uses its network of Quick Response Centers (QRCs) across the globe to deliver these aftermarket services.
We currently have a Neutral recommendation on Flowserve Corporation.
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