Praxair Inc. (PX) recently announced the opening of a new coating facility in Singapore via its wholly-owned subsidiary, Praxair Surface Technologies. The coating facility will primarily tap the growing demand in aviation and energy markets.
The facility has commenced operations by providing thermal spray coatings for gate valve and other critical components used in oil and natural gas production. The company plans to enhance its capabilities by enabling service for aviation and industrial gas turbine markets.
Praxair, one of the leading companies engaged in the production and distribution of industrial gases, has significant growth opportunities in diverse markets. Its concerted effort in increasing exposure and tapping opportunities in emerging markets is also very encouraging. Further, the coating facility in Singapore enables Praxair to offer its services in Southeast Asia.
Moreover, the growth prospects of industrial gas producers are very bright with demand for gases ever rising due to their wide application areas, including chemical processing and petroleum refining, metal production and fabricating, and electronics and health care industries.
Praxair anticipates that EPS would be roughly $5.35-$5.45 and revenue to be approximately $11 billion for the fiscal year 2011. For the second quarter, the company anticipates earnings to be roughly within $1.33-$1.38 range.
However, excessive dependence on international revenue and energy costs, both volatile in nature, is risky. The company also operates in a highly-competitive environment, which may adversely affect top-line results. It faces stiff competition from peers like Air Products and Chemicals Inc. (APD) and Airgas Inc. (ARG).
We currently maintain a Neutral recommendation on the stock.
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