Praxair Mexico, a subsidiary of Praxair Inc. (PX), commenced its operations at a new air separation plant and also announced an increase in its liquid storage capacity in the San Nicolas Industrial Complex in the Monterrey metropolitan area, Nuevo Leon, México.
The air separation unit has a capacity of 400 tons per day, which will enable Praxair Mexico to meet its client’s demand for oxygen, nitrogen, argon and carbon dioxide. The new unit is in addition to an existing air separation unit and carbon dioxide plant in the complex.
Praxair is one of the leading industrial gas producers operating primarily in the Americas and internationally. The company’s Mexican unit is a leading industrial gas provider in the region operating through at least 300 production, distribution and sales sites. Praxair has more than 2,500 employees and 35,000 customers in Mexico.
We believe the growth prospects of industrial gas producers are very bright going forward, with ever-rising demand for gases due to their wide application areas. Industrial gases are being increasingly used by the chemical processing and petroleum refining units along with metal production and fabricating, and electronics and health care industries.
As the economy gradually revives from the recent global crisis, requirement for industrial gases is expected to grow. Moreover, Praxair’s mounting backlog and increasing exposure to emerging markets are very likely to be the company’s prime growth catalysts.
We deem Praxair as well positioned to deliver another good quarter results, beating estimates, as is evident from its positive average earnings surprise. However, the growth momentum might get influenced by foreign currency translation impact, geopolitical uncertainties, volatile energy prices and competition from its peers like Air Products and Chemicals Inc. (APD).
We currently maintain an Outperform recommendation on the stock.
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