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1Anno·

++Linde and other industrial gas producers in comparison++

1. business model of $LIN (-0,42%)
1]

Linde PLC is an industrial gases and engineering company. The company's business consists of two core product lines: Industrial Gases and Engineering. The main products of the industrial gases business are atmospheric gases such as oxygen, nitrogen, argon and noble gases, and process gases such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases and acetylene.

The company designs, engineers and builds industrial gas production plants and provides customers with a range of gas production and processing services, such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.

Employee Satisfaction: [2]

Average rating:

According to the review portal kunuu, workers are satisfied with their employer on average. The company scores a 3.4 out of 5, and has a 50% recommendation rate. The biggest problem of the German workers stands out more clearly: the aggressive company culture. Many layoffs and poor chances of being hired.

Salary:

The majority of workers are happy with salaries at Linde. And rightly so. Rich starting salaries attract qualified employees to the company. Key positions at the company would include:

Engineer: 80,500€ / Buyer: 85,300€ / Project Manager: 97,900€.

General:

It should be noted that I underestimated Linde quite a bit. I was aware that Linde is a big player in the gas business, but the fact that Linde is the world market leader in industrial gases [3], besides AirLiquid, surprised me quite a bit. The chart alone in comparison to Airproducts and Shin-Etsu is a real treat... (picture is attached/ By the way, I would appreciate it if you could finally insert pictures between text, this would help the reading flow significantly)

Is Linde "too big to fail"?

Modern industrial gases are one of the components that make up the engine of modern industry. Without industrial gases, many "normal" products such as plastics or fertilizers would no longer be able to be manufactured. Industrial gases are accordingly indispensable! For example, without chlorine and ethylene, plastic could no longer be produced, or without nitrogen and ammonia, ammonia could no longer be produced. It is also interesting to note that without argon and helium, the semiconductor industry would no longer be able to produce (all products of Linde).

Prospects for industrial gases: [4]

Political and societal pressures, at least here in Germany, are increasing demand for alternatives to conventional oil, benefiting low-CO2 technologies such as hydrogen. In addition, more efficient mechanisms are being invented to improve the efficiency of industrial gases. Whether hydrogen propulsion will become widely accepted as a replacement for the internal combustion engine is questionable - industrial gases already seem to be more attractive for large means of transportation such as trucks or even airplanes. As already mentioned above, industrial gases are indispensable for chemical/medical and some technological industries.

2. key figures in comparison (Linde(DE) vs. Airproducts(USA) $APD (+0,36%)
vs. Shin-Etsu $4063 (-0,88%)
(JPN)) [5]

a. Sales and profit growth (EBIT)

Sales growth over the last 5 years:

Linde: 23.88% / Airproducts 9.17% / Shin-Etsu 3.18%

EBIT growth over the last 5 years:

Linde:

- 2018-2019: (-42%)

- 2019-2020: (15,61%)

- 2020-2021: (50,68%)

- 2021-2022: (8,71%)

- Average growth rate: 6.6%

Airproducts:

- 2018-2019: (13,62%)

- 2019-2020: (5,87%)

- 2020-2021: (3,45%)

- 2021-2022: (9,86%)

- Average growth rate: 6.56%

Shin-Etsu:

- 2018-2019: (22,4%)

- 2019-2020: (2,58%)

- 2020-2021: (-5,6%)

- 2021-2022: (73,11%)

- Average growth rate: 18.5%

Average 5-year EBIT growth trend:

Linde: 6.6% / Airproducts: 6.56%/ Shin-Etsu 18.5%.

b. All about the dividend

When it comes to dividends, my focus is on sustainable growth. I avoid companies that already have too high a payout ratio, or which barely increases the dividend. Interesting ratios for this are:

- Current dividend yield

- Dividend continuity

- Dividend growth

- Payout ratio

Linde:

- Current dividend yield: 1.30%

- Dividend continuity: 30 years

- Dividend growth: (5 years: 8.27%); (10 years: 7.84%)

- Payout ratio: approx. 60%

Airproducts:

- Current dividend yield: 2.2%

- Dividend continuity: 35 years

- Dividend growth: (5 years: 11%); (10 years: 9.5%)

- Payout ratio: approx. 60%

Shin-Etsu:

- Current dividend yield: 2.13%

- Dividend continuity: 25 years

- Dividend growth: (5 years: 10%); (10 years: 9%)

- Payout ratio: approx. 55

c. Low debt

In order for a company to be flexible even in high-interest phases, it should have low debt. I personally equate a high equity ratio with security.

Equity ratio:

Linde: 50.25%

Airproducts: 48.34

Shin-Etsu: 82.4%

3. outlook

I expect my investment to grow steadily in the future and to pay me a nice dividend. Admittedly, none of the companies offers a high dividend yield, and to be honest, I don't have a clear favorite among the three stocks. Linde and Airproducts are the bigger companies, but they have already had their big growth spurts. Shin-Etsu is a small but interesting company, but can it really compete with the big top dogs. According to the current market distribution, Airproducts and Linde are ahead - Linde even a bit more. However, Linde has already done very very well, and has almost three times the market capitalization of Air Products. I will decide in the coming weeks whether to bet on Linde or Air Products, and then open a position for my dividend portfolio.

I will publish the purchase again in GQ.

Final question: Which stock would you buy?

By the way, the outline of this post is inspired by the post of @RealMichaelScott (How to analyze a dividend stock). And on the topic of hydrogen I was inspired by the post of @Hannes_SK (Bye-Bye $PLUG (-2,79%) )

Sources:

[1]: https://de.marketscreener.com/kurs/aktie/LINDE-PLC-46923083/unternehmen/

[2]: Linde Erfahrungen: 711 Bewertungen von Mitarbeitern | kununu

[3]: Industriegase: Marktanteile größter Hersteller weltweit 2018 | Statista

[4]: Industriegase: Hersteller, Produktion und Anwendungen - Gasido.de

[5]: TraderFoxx; marketscreener; finanzen.net

#wasserstoff
#linde
#zukunft
#stockanalysis
#etfs
#aktien
#dividenden
#dividendencheck
#dividendenaktie
#geldanlage

30 Commenti

Hannes@Hannes_SK

1Anno

Link the respective shares so that the contribution is not lost. Otherwise, it would be a real shame. $LIN $APD $4063 In general, I would advise any potential investor in the H2 sector to look for an industrial gas manufacturer, or perhaps a mineral oil company. Here, decades of experience and research are always in the background. The market power can also only be taken away to a limited extent. Crisis resistance through medical gases plays a relentless role in the segment. In addition, one can speak here quite of a moat in the chemical industry, since one is always producer of the first row. An eye in the Far East perhaps still $4091. For me personally an investment in Linde and APD plays unfortunately no role, since they are in the S&P. I would probably lean towards $AI High praise! I would be very happy to see the part with APD! 😁

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suscimer@suscimer

1Anno

@Hannes_SK Thanks for the constructive suggestions. $LIN $APD I need to analyze in more detail - I'll be happy to share the results

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Hannes@Hannes_SK

1Anno

@suscimer
Of course, if you need help with a technical assessment, don't be afraid to ask. 😊

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Nico Uhlig@RealMichaelScott

1Anno

Thanks for the link. But why do you compare Linde, Air Products and Shin-Etsu? I haven't done any more research, but Shin-Etsu is only marginally (if at all) active in industrial gases. As far as I know, the 4 big players are Linde, Air Liquide, Air Products and Nippon Sanso. If I remember correctly, these 4 account for more than 90% of the market among themselves. I know Shin-Etsu mainly as a manufacturer of hyperpure silicon wafers; i.e. the raw material for chip production. Personally, I think Linde is a strong company, but unfortunately it is also very expensive. That's why I decided to invest in Air Products a year ago. Here, I will probably also add again.

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Pezi@Pezi

1Anno

@RealMichaelScott What makes you think that Linde is currently expensive?

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suscimer@suscimer

1Anno

@Pezi Well, there are certain ratios for sales/EV, to name just one. The P/E ratio and the market capitalization are also not exactly low. I agree with him

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Pezi@Pezi

1Anno

@suscimer Linde is currently below the average P/E ratio of recent years. According to Aktienfinder, Traderfox, etc., the share is more favorably valued than $APD and $AI

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Nico Uhlig@RealMichaelScott

1Anno

@Pezi I don't have everything in my head now and only remembered that the P/E ratio is significantly higher than that of the competition. Whether it is already highly valued is another matter, but the fact that it is below the average P/E ratio makes sense given the current high interest rates: Interest rates high -> P/E ratio down So it is clear that the P/E ratio is currently somewhat lower than in the zero interest rate phase.

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Pezi@Pezi

1Anno

@RealMichaelScott

...isn't it exactly the other way around? If interest is no longer earned on credit balances, shares and other financial investments automatically become more attractive, as there are still returns to be had here. A higher attractiveness of shares leads to a greater willingness to buy even "expensive" shares. Air Liquide, Linde and Air Products are all between 25 and 27 from the P/E ratio, i.e. very similar.

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Nico Uhlig@RealMichaelScott

1Anno

@Pezi no, unfortunately not. It's just the opposite: the lower interest rates are, the more capital flows into the stock market, because that's where the money generates a return. The higher interest rates are, the more money is put into "safe" investments such as bonds or time deposits. Why? Stocks are a risky investment and the inverse of the P/E ratio can be seen as the "expected return". With a P/E ratio of 20, the expected return is roughly 1/20th, or 5%. Bonds and interest rates are risk-free assets. The higher the interest rates are the more attractive these investments become, because there you get the return risk-free. For a detailed explanation I am so free and link a post of mine on this topic: https://getqu.in/JINEKJK5UV51/l2PNEr2MrN/

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Nico Uhlig@RealMichaelScott

1Anno

@Pezi I don't know how you arrive at a P/E ratio of 25 for Linde, according to seekingalpha we are currently at 43.7 according to GAAP. The forward P/E ratio according to GAAP is just under 30.

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Pezi@Pezi

1Anno

@RealMichaelScott right, thinking error 🤦🏼‍♂️

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Apfelmus@Apfelinvest

1Anno

shin etsu is not an industrial gas manufacturer. shin etsu is a chemical company.

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suscimer@suscimer

1Anno

@Silkroad Took Shin-Etsu instead of Air Liquid because I like the dividend and growth🤓

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Memo0606@Memo0606

2Settimana

@suscimer Do you also find $4063 shin etsu very attractive at the moment?

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VinTech@VinTech

1Anno

As a Japanese representative, I would have rather chosen Nippon Sanso. The top 3 of the chemical gases are Linde, AirProducts and Air Liquide. Nippon then already comes in at number 4, but has the most attractive valuation of all, because it has not yet run so hot. However, the company has a strong growth and is well established in the market! (I can see this myself in real practice).

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Memo0606@Memo0606

2Settimana

@VinTech would you rate Nippon higher than shin-etsu?

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Gerit@Gerit

1Anno

@ccf for the effort of a great contribution! 🙌

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Pezi@Pezi

1Anno

@RealMichaelScott What makes you think that Linde is currently expensive?

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Chris@Haufeninthefinance

1Anno

You can only compare the return from around 2002. From 2002 onwards, all the values you have compared are on the stock market. Doesn't change the core statement much 👌 https://www.tradingview.com/x/qEo5Q0Ew/

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Utente eliminato

1Anno

Il commento è stato cancellato

suscimer@suscimer

1Anno

@D-Duck $AI falls away for me because of the French withholding tax😅

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Utente eliminato

1Anno

Il commento è stato cancellato

Hannes@Hannes_SK

1Anno

@D-Duck
France's withholding tax on Getquin is really daunting apparently. 😄

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Utente eliminato

1Anno

Il commento è stato cancellato

Hannes@Hannes_SK

1Anno

@D-Duck
I can only confirm that. I don't think I'll need to pay them in 2027 anyway. 🇫🇷

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Utente eliminato

1Anno

Il commento è stato cancellato

Hannes@Hannes_SK

1Anno

@D-Duck
That's right. 😄

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Utente eliminato

1Anno

Il commento è stato cancellato

Hannes@Hannes_SK

1Anno

@D-Duck That's right. The decision was well considered. I was given 2 years to think about it. I don't have a family yet. Therefore it resembles a new beginning. Financially and professionally it will have been the right decision. Family will show. You also a nice weekend. 😉

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