(PX) Praxair Starts Supplying Gases to Hua Li

Praxair (China) Investment Co. Ltd, the Chinese unit of Praxair Inc. (PX) and a leading industrial gas supplier, started supplying industrial gases to Shanghai Hua Li Microelectronics Corporation. A long-term contract was signed by the two parties earlier in September, 2010.

Praxair China is currently supplying ultra-high-purity oxygen, nitrogen, argon, hydrogen and helium for Hua Li’s 12-inch integrated-circuit chips production line. Situated in Shanghai’s Zhangjiang High-Tech Park, Hua Li Microelectronics is a state-owned company engaged in the production of advanced integrated circuits.

The contract further strengthens Praxair China’s foothold as a leading industrial gas supplier in Zhangjiang High-Tech Park. The company expanded its existing pipeline in the park complex to supply the gases for the project.

Praxair is a premier industrial gas supplier in the Americas and internationally. The company’s intense focus on expanding its operations within its operating regions and adding new customers has accelerated its profit growth, which should continue in the future.

For the long run, the company has set a goal to achieve annual organic sales growth of 8%-12%, while it is anticipated that emerging markets, including South America, Asia, and Mexico, would account for approximately 45% of total sales by 2015 compared with 36% in the fiscal year 2010.

Moreover, the company is experiencing high project backlog which reached about $2.5 billion at the end of the first quarter of fiscal 2011. Further, growth in the company’s backlog will enable Praxair to achieve its revenue targets.

The company is slated to release its second quarter financial results on July 27, 2011. Currently, the Zacks Consensus Estimate for the quarter is $1.37, representing a year- over-year increase of 15.44%. Estimate for the fiscal year 2011 and 2012 is $5.47 and $6.27, respectively.

Praxair faces stiff competition from Air Products and Chemicals Inc.(APD) and Airgas Inc. (ARG). We currently maintain a Neutral recommendation on Praxair.

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