| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 185.10 | -32 |
| Intrinsic value (DCF) | 152.52 | -44 |
| Graham-Dodd Method | 40.40 | -85 |
| Graham Formula | 56.40 | -79 |
Air Products and Chemicals, Inc. (LSE: 0HBH.L) is a global leader in industrial gases and related equipment, serving diverse industries such as refining, chemicals, metals, food and beverage, electronics, and energy. Headquartered in Allentown, Pennsylvania, the company specializes in atmospheric gases (oxygen, nitrogen, argon), process gases (hydrogen, helium, CO2), and specialty gases, alongside manufacturing critical equipment like air separation units and hydrogen transport systems. With a strategic collaboration with Baker Hughes to advance hydrogen compression technology, Air Products is positioning itself at the forefront of the clean energy transition. The company’s robust infrastructure and global footprint enable it to cater to high-demand sectors, reinforcing its role as a key player in the industrial materials sector. Its consistent revenue streams and technological innovations make it a vital supplier in essential industries worldwide.
Air Products and Chemicals presents a stable investment opportunity with its strong market position in the industrial gases sector, supported by a diversified customer base and recurring revenue from long-term contracts. The company’s focus on hydrogen and clean energy aligns with global decarbonization trends, offering growth potential. However, high capital expenditures ($6.8B in FY2024) and substantial debt ($15B) pose risks, particularly in a rising interest rate environment. Its low beta (0.89) suggests lower volatility relative to the market, appealing to conservative investors. The dividend yield (~2.5% based on a $7.10/share payout) adds income appeal, but investors should monitor debt levels and the ROI on hydrogen-related investments.
Air Products competes in the industrial gases market through scale, technological expertise, and long-term contracts, which provide revenue stability. Its competitive edge lies in its extensive infrastructure (e.g., pipelines, on-site plants) and leadership in hydrogen, a critical fuel for the energy transition. The Baker Hughes partnership enhances its compression technology, differentiating it in emerging clean energy markets. However, rivals like Linde and Air Liquide have larger global footprints and stronger balance sheets, enabling more aggressive R&D and M&A. Air Products’ focus on North America and selective international markets (e.g., Middle East) limits diversification compared to peers. Its capital-intensive model, while a barrier to entry for smaller players, also constrains flexibility amid demand shifts. The company’s ability to monetize hydrogen infrastructure and maintain pricing power in commoditized gases will be key to sustaining its position.