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Air Products (APD) Inks Deal With EPEC And Sinopec In China

Published 05/08/2017, 10:16 PM
Updated 07/09/2023, 06:31 AM

Air Products & Chemicals, Inc. (NYSE:APD) has entered into a strategic cooperation agreement with EPEC and China Petrochemical International Co., Ltd. The deal aims to boost the development of e-commerce on the EPEC.com portal.

Per the terms of agreement, the three parties will build strategic relationships through cooperation and communication on various factors including sales, procurement, international market expansion, supply chain financial services and credit system construction.

Air Products will be the third multinational company and first industrial gases supplier to enter into strategic partnership with EPEC and Sinopec on e-commerce. EPEC.com is an innovative supply chain to business (SC2B) industrial portal that is built on the concept of Internet + Supply Chain and fueled by Sinopec’s vast procurement needs. The portal enables Sinopec to maximize supply chain competitiveness. Additionally, it also provides financial, sales, procurement and integrated services to other companies and reduces operational costs.

The EPEC.com portal’s commercial operations started on Apr 18, 2016 and it has executed orders worth $ 13.4 billion, involving more than 33 million products sourced from over 35,000 suppliers till date.

According to Air Products’ Industrial Gases China President, Saw Choon Seong, the deal is driven by its longstanding commitment to support China’s economic and social growth and extend cooperation with leading companies such as Sinopec. This project is an effort to accelerate structural transformation of the manufacturing industries by supporting the ‘Internet+’ strategy.

The e-commerce portal will allow the company to leverage technology for boosting the ‘Internet Industrial Gases’ initiative and also support sustainable development of this industry in China. The company also aims to innovate its sales model in order to serve the manufacturers in chemical and other industries better.

Air Products’ shares fell around 21.3% over the past three months, underperforming the Zacks categorized Chemicals-Diversified industry’s 14.6% loss.

Air Products has a strong project backlog and benefits from cost-reduction measures and a diverse customer base. Moreover, acquisitions, strategic partnerships and new business deals are expected to support results. The company remains on track with its cost-reduction programs which should support margins.

However, Air Product’s industrial gases business in the EMEA region is witnessing pressure from a weak operating environment. The company is also seeing lower volumes in Latin America due to weak demand. Moreover, volumes in packaged gases continue to be weak while LNG (liquefied natural gas) sales remain under pressure due to low project activity.

Air Products currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked companies in the basic materials space include Kronos Worldwide Inc (NYSE:KRO) , Akzo Nobel NV (OTC:AKZOY) and ArcelorMittal (NYSE:MT) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Kronos has an expected long-term earnings growth of 5%.

Akzo Nobel has an expected long-term earnings growth of 11.1%.

ArcelorMittal has an expected long-term earnings growth of 11.5%.

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Air Products and Chemicals, Inc. (APD): Free Stock Analysis Report

Kronos Worldwide Inc (KRO): Free Stock Analysis Report

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