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Strengthening its bonds, Praxair China, a wholly-owned subsidiary of industrial gas producer Praxair Inc. ( PX - Analyst Report ) entered into a supply agreement with Changzhou Trina Solar Energy Co., Ltd. The latter is a subsidiary of China-based photovoltaic (PV) manufacturer, Trina Solar Limited ( TSL - Snapshot Report ) .
As per the contract terms, Praxair China will supply silane, ammonia, argon, nitrogen and oxygen to Trina Solar’s new production facility at Changzhou, Jiangsu Province. Financial terms of the transaction have not been disclosed.
Prior to this contract, Praxair China had trade relations with Trina Solar, whereby the company in January 2011 agreed to supply silane to Changzhou Trina Solar Energy Co. Ltd. in Jiangsu Province.
With promising long-term prospects, Praxair now covers ever expanding application areas for industrial gases. Extensive use of these gases is found in chemical processing, petroleum refining, metal production, fabricating, electronics and health care industries. By 2015, the company targets to achieve annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18%.
The company’s foothold in the Asian countries proliferates as project start-ups in India and China escalate the region’s contribution to Praxair. Moreover, $1 billion project backlog in China, India and Korea adds to the company’s future growth prospects.
The current Zacks Consensus Estimate for the first quarter of 2012 is $1.36, representing a year-over-year increase of 5.54%. Estimates for the fiscal years 2012 and 2013 are $5.83 and $6.61, reflecting annual growth of 7.30% and 13.51%, respectively.
We maintain a Neutral recommendation on Praxair. The stock currently carries a #3 Zacks Rank, implying a short-term (1-3 months) Hold rating.
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