APD – Market expectations are for Uniform ROA to expand to record highs, but management may be concerned about their joint venture, growth, and industrial production declines

• Air Products and Chemicals, Inc. (APD:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 2.6x Uniform P/B, implying bullish expectations for the firm. However, management may be concerned about the potential of their Jazan joint venture, EBITDA growth, and industrial production declines
• Specifically, management may be concerned about the progress and potential profitability of their Jazan joint venture, the capital-intensive nature of their acquired power plant assets, and the positive reception of their acquisition announcement. In addition, they may lack confidence in their ability to sustain EBITDA and EPS growth and maintain free cash flow and pricing performance. Furthermore, they may be exaggerating their focus on environmental issues, and they may be downplaying concerns about industrial production declines. Finally, they may be concerned about the progress of their YK Group project discussions and about the negative impact of their India contract modification.