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How Praxair Plans to Expand in South Korea

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Praxair expands in South Korea

On January 9, 2017, Praxair (PX) announced the startup of its fourth air separation plant to serve the Samsung Hwasung site in Gyeonggi Province, South Korea. The new plant will supply nitrogen with a production capacity of 1,400 tons per day. However, Praxair didn’t disclose the financial details of the deal.

B.S. Sung, president of Praxair Korea, said, “This is just one example of the long-standing relationships that we build with our customers as we help them drive growth in their businesses.” This expansion will strengthen Praxair’s revenues in Asia. Praxair’s Asia segment recorded revenue of $391 million in 3Q16 with an operating profit of $68 million.

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Praxair stock price

Praxair shares dropped 0.8% for the week ended January 13, 2017, and closed at $117.08. PX traded 1.5% lower than the 100-day moving average price of $118.92, indicating a downward trend in the stock. Analysts expect PX’s 12-month target price to be at $125, implying a potential return of 6.8% over the closing price of January 13, 2017. In 2016, Praxair returned 14.4%.

Investors can indirectly hold Praxair by investing in the iShares U.S. Basic Materials ETF (IYM), which invests 6.7% of its total holdings in Praxair as of January 13, 2017. The top holdings of the company include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON), which have weights of 13.0%, 12.8%, and 9.4%, respectively, for the same period.

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