WEBULL
WebtradeDownload

LNG Plant Deal Might Change The Case For Investing In Air Products Shares

Simply Wall St · 2d ago
  • Air Products and Chemicals announced it will design, build and operate an LNG based air separation unit at Pengerang’s regasification terminal in Johor, supplying over 600 tonnes per day of liquid oxygen, nitrogen and argon to merchant customers across Southern and Central Malaysia from early 2027.
  • This will be the fifth LNG based air separation plant for Air Products and Chemicals in Asia. It uses regasification cold energy to lower production emissions, directly linking future industrial gas volumes in Malaysia to more energy efficient and lower carbon supply for electronics, petrochemical, aerospace and manufacturing clients.
  • We will now examine how Air Products and Chemicals' broader investment narrative relates to this LNG based Malaysian capacity expansion.

Scan how Air Products and Chemicals’ latest LNG move compares with other industrials expanding capacity and efficiency, starting with a curated list of list of solid balance sheet and fundamentals (25 results).

Air Products and Chemicals Investment Narrative Recap

To own Air Products and Chemicals, you need to be comfortable with a capital intensive industrial gas model where long term contracts, big project backlogs and disciplined spending drive the story. The LNG based Malaysian ASU fits that pattern, adding capacity that supports electronics and industrial demand without changing the near term hinge point, which is still execution on existing hydrogen, ammonia and gas projects.

The biggest swing factor over the next couple of years remains capital discipline versus heavy capex and debt. This new plant looks incremental rather than transformational for free cash flow or dividends. Key risk still sits with large projects like NEOM and other electronics builds potentially tying up capital without timely returns.

One useful reference point is management’s decision not to proceed with the Louisiana Clean Energy Complex and to steer annual capex toward about US$2.0b to US$2.5b, with roughly US$1.5b aimed at traditional industrial gas projects. That move highlighted a focus on pruning lower return ideas and keeping the portfolio skewed to contracted, more predictable industrial volumes.

The LNG based ASU in Malaysia lines up with that tilt toward traditional gases and electronics exposure rather than another mega clean energy bet. For investors, the key question is whether projects like this, plus about US$3b of industrial gas backlog and long dated hydrogen and ammonia investments, can come online cleanly enough to support the earnings ramp analysts expect without reigniting concerns around capex creep and balance sheet pressure.

Air Products and Chemicals' narrative connects analyst expectations for US$15.7b of revenue and US$3.9b of earnings by 2029 to LNG linked projects and the wider industrial gas backlog. This implies 7.7% yearly top line growth and an earnings swing of about US$3.95b, from a loss of US$47.3m today to the forecast profit pool.

Uncover how Air Products and Chemicals' fair value indicates a 19% potential upside to its current price, a valuation gap that could close sooner than many anticipate.

NYSE:APD 1-Year Stock Price Chart
NYSE:APD 1-Year Stock Price Chart

Exploring Other Perspectives

Fair value views on Air Products and Chemicals from three Simply Wall St Community members cluster tightly between US$343.05 and about US$354.71, which keeps the current market debate very narrow. Treat that as just one lens. Heavy project capex, helium contract execution and the LNG based Malaysia build could all shift your own view, so explore several alternative angles before deciding how this story fits your portfolio.

Explore 2 other Air Products and Chemicals fair value estimates, including one that suggests it could be worth just $343.05.

Decide For Yourself

Disagree with existing narratives? Extraordinary investment outcomes rarely come from following the herd, so go with your own analysis.

Looking For More Investment Ideas Beyond Air Products and Chemicals?

If the Air Products and Chemicals story has sharpened your thinking on capital intensity, contracts and balance sheet strength, it can be useful to compare it with other businesses that share some of those qualities or push in a very different direction. The Simply Wall St Screener is a quick way to line up those contrasts and pressure test your convictions before committing fresh capital.

  • If you want potential value combined with robust finances, start by lining up companies that appear attractively priced and financially sound through the 32 high quality undervalued stocks.
  • If income reliability matters to you, scan for higher yielding payers with solid fundamentals using the 8 dividend fortresses.
  • If capital preservation is the priority, narrow your universe to companies that score well on resilience and risk using the 32 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.