A bet on the hydrogen economy

Air Products and Chemicals (APD) posted marginally gains following positive management communication. The press release states that the Jazan and Lu'An projects have returned to normal operating rhythm. This is a positive signal, which should lead to a positive revision of the forecast for the company's financial indicators and an increase in capitalization. We believe that the comments regarding Lu'An were not understood by all market participants, therefore the news was not taken into account by the market in full. However, the fact that the Jazan project has been relaunched and is likely to be operational by the end of this year is great news that has yet to be played out. We raise our target price for the stock from $ 340 to $ 360.

APD is the best bet in industrial gas, hydrogen in particular. While many companies in this industry have similar capabilities in the green hydrogen space, Air Products and Chemicals is in our opinion the most ambitious story ever. The company is developing a unique large-scale facility in Saudi Arabia called NEOM and plans to export ammonia as well as convert it back to hydrogen for end-use. We analyzed the global hydrogen market as well as the ammonia conversion and transport cost curve. We believe NEOM can be competitive as the project succeeds in reducing production costs.

Air Products and Chemicals, Inc., a Delaware corporation originally founded in 1940, serves customers globally with a unique portfolio of products, services, and solutions that include atmospheric gases, process and specialty gases, equipment, and services. Air Products is the world’s largest supplier of hydrogen and the company has built leading positions in growth markets such as helium and liquefied natural gas ("LNG") process technology and equipment. Air Products also develops, engineers, builds, owns and operates some of the world’s largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals, carbon capture projects, and world-scale carbon-free hydrogen projects supporting global transportation and the energy transition.