Kraton's (KRA) Modern HSBC Plant In Taiwan To Steer Growth

Kraton Corporation (NYSE:KRA) announced the opening of a hydrogenated styrenic block copolymer (HSBC) plant in Mailiao, Taiwan. The plant has a production capacity of 30 kiloton. It is operated and owned by Kraton Formosa Polymers Company, a joint venture between Formosa Petrochemical Corp and Kraton. The plant will boost the company’s innovation-grade business, especially low molecular weight HSBC products.

The HSBC products and polymers are long lasting and have clarity in olefin-based compounds for automotive, film and medical applications. These polymers are also known for having low viscosity for thermally stable adhesives, coatings and sealants.

The new facility includes product and process laboratory equipped with capabilities for manufacturing low viscosity products. It has already started commercial production and employs roughly 100 people.

According to President and CEO, Kevin M. Fogarty, the plant will help Kraton to effectively serve the growing export and Asian markets through higher production capacity of varied grades of HSBC products. The plant also demonstrates Kraton’s commitment to steer organic growth in key markets through state-of-the-art innovation and infrastructure.

Kraton’s shares rallied 23.1% over the past three months, outperforming the Zacks categorized Chemical-Specialty industry’s 2.8% gain.

Kraton reported net income of $6.4 million or 20 cents per share in first-quarter 2017 compared with a profit of $88 million or $2.84 per share recorded a year ago. Barring one-time items, adjusted loss was 15 cents per share that was narrower than the Zacks Consensus Estimate of a loss of 23 cents.

The company recorded revenues of $458 million in the reported quarter, up around 9% year over year. However, sales missed the Zacks Consensus Estimate of $495 million.

The company expects adjusted EBITDA for 2017 to be around $350 million. It also anticipates to reduce net debt by $100–$150 million this year. Kraton estimates that the second-quarter results will reflect a positive spread between ECRC and FIFO of roughly $10 million.

Kraton currently sports a Zacks Rank #1 (Strong Buy)

Other Stocks to Consider

Other top ranked companies in the basic materials space include Methanex Corporation (NASDAQ:MEOH) , Akzo Nobel NV (OTC:AKZOY) and The Chemours Company (NYSE:CC) . All the three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Methanex has an expected long-term earnings growth of 15%.

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

Chemours has an expected long-term earnings growth of 15.5%.

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