EQ360_859315

Chemicals

Despite lower sales, earnings were resilient due to the robust business model. Air Liquide
reiterated its guidance for net profit excluding forex effects and book gains from disposal to be
close to last year’s level.

However, Air Liquide will dispose of its hygiene business Schülke, which generates EUR335m sales
and more than EUR70m EBITDA. The deconsolidation will occur on 1 July 2020. Moreover, we see
forex effects being a significant headwind for H2 2020 and H1 2021. Hence, we cut our EPS 2020-
22E estimates by 1%, 4% and 5% respectively.

Table 9: Change in earnings estimates

2020 2021 2022
Old
New Old Change New Change New Old Change
21,626
Sales 20,093 20,540 -2% 20,602 6,222 -5% 21,738 23,114 -6%
0% 6,067 4,069 -2% 6,546
EBITDA 5,810 5,823 -1% 3,943 3,969 -3% 4,366 6,757 -3%
-1% 3,843 2,578 -3% 4,266
OIR 3,676 3,695 -1% 2,484 5.44 -4% 2,835 4,576 -5%
5.24 5.96
EBIT 3,556 3,575 -1 -4 4,476 -5%

Net income 2,227 2,242 2,991 -5%

EPS 4.73 4.76 6.29 -5%

Source: Kepler Cheuvreux

We are 5% below consensus for 2020 at the EPS level. However, we do not know whether
consensus is distorted given the upcoming book gain from the disposal of Schülke. For 2021, we
are 4% below the street, while for 2022E we are 2% above consensus.

Table 10: How we differ from consensus

2020 2021 2022
Consensus
KECH est. Consensus Deviation KECH est. Deviation KECH est. Consensus Deviation
22,116
Sales 20,093 20,988 -4% 20,602 6,276 -7% 21,738 22,983 -5%
-1% 6,067 4,050 -3%
EBITDA 5,810 5,850 -2% 3,943 -3% 6,546 6,571 0%
n.a. 3,843 n.a. n.a.
OIR 3,676 3,735 -5% 2,484 2,617 -4% 4,366 4,335 1%
-5% 5.24 5.52 -4%
EBIT 3,556 n.a. 4,266 n.a. n.a.

Net income 2,227 2,342 2,835 2,791 2%

EPS 4.73 4.97 5.96 5.87 2%

Source: Thomson Reuters, Kepler Cheuvreux

Updated model for 2022-30
As mentioned before for Linde, we also apply detailed earnings estimates for 2022-30 for Air
Liquide given the favourable prospects for hydrogen. This has an impact on our DCF analysis for
Air Liquide. We have also used our terminal growth rate of 3% already for the period beyond 2022E.
While we maintain our terminal growth rate, we shift the starting point to 2031E. We now have
detailed estimates for 2022-30E: 4% top-line growth, 7.2% EBIT growth, and 8.0% EPS growth.

Valuation and ratings

Valuation of Linde
We value Linde using two valuation methods: a DCF analysis and a peer group comparison. Due
to 6-8% higher earnings estimates as well as the more detailed (and thus higher) estimates for
2022-30E, our fair value based on a DCF analysis moves up to USD318.

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Table 11: DCF analysis USDm 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
USDm
Revenues USDm 27,470 28,933 30,024 31,157 32,333 33,554 34,823 36,140 37,508 38,928
NOPAT USDm 3,086 3,604 3,888 4,205 4,538 4,890 5,258 5,647 6,056 6,487
EBIT USDm
Eliminations USDm 4,005 4,671 5,026 5,424 5,839 6,272 6,724 7,197 7,690 8,204
Taxes USDm 0 1 2 3 4 5 6 7 8 9
Plus Depreciation & amortisation USDm
Minus increase in NWC USDm -919 -1,068 -1,141 -1,222 -1,304 -1,387 -1,472 -1,557 -1,642 -1,726
Minus Capital Expenditures USDm
Minus Minorities 4,723 4,833 4,943 5,057 5,172 5,291 5,412 5,536 5,663 5,793
Free cash flow (FCF) USDm 0 0 0 0 0 0 0 0 0 0
Years USDm
Value of the forcast period -3,621 -3,838 -4,029 -4,230 -4,440 -4,661 -4,893 -5,137 -5,392 -5,661
Cash value of terminal value % -1 -1 -1 -1 -1 -1 -1 -1 -1 -1
Share of terminal value in EV %
Long-term growth rate of FCF USDm 4,187 4,597 4,800 5,031 5,269 5,518 5,776 6,045 6,325 6,618
Enterprise value USDm 1 2 3 4 5 6 7 8 9 10
Long-term debt USDm
Value of total equity USD 49,433
Fair value per share %
WACC 116,666
USD 70.2
Addition of accrued interest Years
Compounding period USD 3.0
Value from compounding USD 166,110
FVpS new
11,256.0
154,854

296.77
6.0

17.8
1.00

21.6
318.4

Source: Kepler Cheuvreux

The second valuation method is a peer group comparison. We compare Linde with the valuation
multiples of Air Liquide, Air Products, and Tayio Nippon Sanso. Given Linde’s superior profitability
in terms of the EBIT margin, we apply a valuation premium in the same magnitude. Thus, we see
the fair value based on peer group multiples at USD272 per Linde share.

Table 12: Peer group comparison

Name P/E P/CF EV/EBITDA EBITDA mg (%) P/BV ROIC (%) EBIT mg (%) FCF yield (%)
2021 2021 2021 2021 2021
2021 2021 2021
12.8 13.1 29.4% 2.9 9.1%
Air Liquide 25.3 17.1 17.7 43.0% 5.0 10.5% 19.1% 2.7%
5.3 8.6 20.9% 1.5 3.8%
Air Products 30.8 11.7 13.1 31.1% 3.1 7.8% 27.3% 0.0%
16.1 14.6 33.0% 2.7 7.2%
Taiyo Nippon Sanso 13.8 37.9% 11.2% 6.2% -12.4% -7.6% 10.6% 6.9%

Average 23.3 19.0% 3.2%

Linde 26.1 22.0% 3.3%

Difference 12.0% 15.8% 3.4%

Source: Kepler Cheuvreux

Our target price is the unweighted average of the fair values of DCF analysis as well as peer group
comparison, which results in USD295 per share. However, compared to the last time we
conducted this exercise, the forex rate has changed from 1.09 to 1.17, which implies a dilution for
Linde’s target price. Nevertheless, we raise our target price for Linde by 12%, from EUR225 to
EUR252, and maintain our Buy rating.

keplercheuvreux.com 52

Chemicals Chart 58: Target price of Linde

Chart 57: Fair values of Linde shares

Source: Kepler Cheuvreux Source: Kepler Cheuvreux

Valuation of Air Liquide

For Air Liquide, we use the same valuation approach as we did for Linde. We base our target price
on the average of a DCF analysis and a peer group comparison. Our EPS 2020-2022E estimates cut
by 1-5% is overcompensated by the cash inflow from the disposal of Schülke (at least EUR925m)
and more detailed (and thus higher) estimates for 2022-30E, our fair value based on a DCF analysis
is EUR156 per share.

Table 13: DCF analysis EURm 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
EURm
Revenues EURm 20,602 21,738 22,614 23,525 24,474 25,462 26,491 27,562 28,677 29,837
NOPAT EURm 3,093 3,345 3,610 3,887 4,178 4,484 4,805 5,143 5,499
EBIT EURm 2,781 4,266 4,609 4,968 5,344 5,737 6,151 6,585 7,041 7,521
Taxes EURm 3,843 -1,003 -1,094 -1,188 -1,286 -1,389 -1,497 -1,610 -1,728 -1,852
Depreciation & amortisation EURm 2,180 2,236 2,294 2,353 2,413 2,475 2,538 2,602 2,668
Minus increase in NWC EURm -892
Minus Capital Expenditures EURm 2,124 91 77 81 86 90 95 100 105 110
Minus Minorities -3,650 -3,779 -3,912 -4,052 -4,196 -4,347 -4,503 -4,665 -4,834
Free cash flow (FCF) EURm 51
Years % -3,512 -99 -103 -107 -111 -116 -121 -125 -130 -136
Cash value of terminal value % 1,615 1,777 1,966 2,163 2,370 2,586 2,815 3,054 3,307
Share of terminal value in enterprise value -97
Long-term growth rate of FCF EURm 1,348 2 3 4 5 6 7 8 9 10
Enterprise value EURm
Long-term debt EURm 1
Value of total equity
Fair value per share EUR 60,010
WACC % 73.6

3.0
81,588

13,338
68,250

144.84

6.0

Addition of accrued interest EUR 8.7
Compounding period Years 1.0

Value from compounding + dividend EUR 11.5
FVpS new EUR 156.37

Source: Kepler Cheuvreux

The peer group for Air Liquide is similar to Linde. Besides Air Products and Tayio Nippon Sanso,
Linde is also among its peers. We calculate a fair value of EUR147 per Air Liquide share, which
includes a premium of 9% given the average delta to peer group from superior ROCE and inferior
EBITDA margin.

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Table 14: Peer group comparison

Name P/E P/CF EV/EBITDA EBITDA mg (%) P/BV ROIC (%) EBIT mg (%) FCF yield (%)
2021 2021 2021 2021 2021
2021 2021 2021
16.1 14.4 33.0% 2.7 7.2%
Linde 26.1 17.1 17.7 43.0% 5.0 10.5% 22.0% 3.4%
5.3 8.6 20.9% 1.5 3.8%
Air Products 30.8 12.8 13.6 32.3% 3.1 7.2% 27.3% 0.0%
12.8 13.3 29.4% 2.9 9.1%
Taiyo Nippon Sanso 13.8 -0.3% -1.5% -8.9% -4.6% 27.2% 10.6% 6.9%

Average 23.6 20.0% 3.4%

Air Liquide 25.3 19.1% 2.7%

Difference 7.6% -4.1% -20.9%

Source: Kepler Cheuvreux

The average of the fair values from a DCF analysis and a peer group comparison is EUR151. This is
our new target price and represents an increase of 6% compared to the previous one (EUR143).
We keep our Buy rating on Air Liquide.

Chart 59: Target price of Air Liquide

Source: Kepler Cheuvreux

Additional upside possible in the event of a strong uptake of hydrogen market
We have not factored into our models the opportunities from hydrogen for 2030-50E, as this is so
far into the future. One way to play these long-term prospects is by applying a higher terminal
growth rate in the DCF analysis.

Based on a sensitivity analysis, we see that a 1% increase in the terminal growth rate (from 3% to
4%) would lift the fair value based on a DCF analysis by 42% from USD318 (EUR272) to USD452
(EUR386). At Air Liquide, the fair value would increase by 47% from EUR156 to EUR230.

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Chemicals

Stock-picking recommendations

While we are cautious about the general chemical industry and thus about classical chemical
companies given the risk of further waves of the pandemic, we like defensive stocks such as
industrial gas players given their robust business models. We have Buy ratings on Linde and
Air Liquide, but our preference is for Linde given its likely more favourable trajectory in
terms of GHG efficiency improvement. Moreover, we see the earnings development in the
short run at Linde more attractive than at Air Liquide.

Investment case

Cautious view on the general chemical sector
For chemicals in general, we are cautious given the risk of further waves of the pandemic. The
financial market is playing a V-shaped recovery with new highs in historical multiples, although
we think it will take years for companies in the sector to return to pre-crisis levels.

Defensive stocks such as industrial gas players in favour
Within chemicals, we like defensive plays such as Nutrition companies (e.g. DSM) but also
industrial gas companies (e.g. Linde and Air Liquide). The latter two have robust business models,
which have proven themselves during the current crisis, with resilient earnings in Q2 and H1. While
Linde posted a 4% YOY increase in adj. EPS in Q2, Air Liquide reported a 2% YOY improvement in
EPS in H1 (the company does not disclose quarterly earnings). This is far better than many other
chemical companies, which suffered massive drops in earnings in Q2. The backdrop to this
situation is the defensive business models with take-or-pay contracts, healthcare activities, and
some exposure to food & beverages.

Linde and Air Liquide have attractive profiles
Both Linde and Air Liquide have healthy balance sheets. We see Linde’s net debt/EBITDA 2020E at
1.8x while Air Liquide is set to reach 2.6x by year-end. Both companies have secured financing for
the years to come and thus have no refinancing issues.

Besides this, Linde and Air Liquide offer good growth prospects (see section 3) and strong
cashflow generation (see Valuation), enabling them to grow dividends, which they have both
increased over many years as well as decades.

High ranking in sustainability criteria
Moreover, Air Liquide and Linde rank high in terms of sustainability criteria, making them
attractive for ESG investors. Air Liquide received from the Carbon Disclosure Project (CDP) the
highest grade "A" both for its actions in favour of the climate and its sustainable management of
water. Only 38 out of more than 8,400 companies received this rating. It again received an A rating
from MSCI in 2019. From Ecovadis, it got 68 out of 100 points last year, one notch higher than in
2018. According to Sustainalytics, Air Liquide has a low risk on a risk scale and belongs to the first
percentile of the chemical industry. At ISS climate, the company received a “C+” ranking in 2019,
up from “C” in 2018, while the best score in chemicals is “B-“.

Linde’s ESG rating was recently upgraded by MSCI to A. The FTSE4 Good index included Linde for
the fifth consecutive year. Linde was ranked 25th in the 100 Best Corporate Citizens of 2020, and
the company is a leader in diversity and inclusion, according to DiversityInc. Besides that, Linde is
a member of the Dow Jones Sustainability Indices. The company is included in the Ethibel
sustainability index and in Bloomberg’s Gender-Equality index.

Our favourite stock is Linde

As outlined in the Valuation section, we have Buy ratings on both Linde and Air Liquide. Many
investors who hold a stake in one of the companies also own shares in the competitor. There might
be some differences for some smaller funds who focus on just one stock depending on their local
bias towards either French or German/Anglo-Saxon investment universe.

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Chemicals

However, ESG is becoming a dominant issue in the chemicals equity space and thus also for
industrial gas companies. We highlighted the massive importance of ESG in our CO2 report on the
chemical sector, published in December 2019.

Accordingly, it is worth looking at the ESG profiles of both companies. For ESG investors, GHG
emissions are of high importance. In both cases, these GHG emissions are currently rather high,
due to the enormous amount of energy required to produce industrial gases. Thus, it is worth
looking at GHG efficiency, which explains how many kg in GHG emissions are produced to
generate EUR1 or USD1 of EBITDA. Thus, the amount of kg in GHG emissions is divided by the
respective adj. EBITDA.

While we see Air Liquide’s carbon intensity rising next year due to the acquisition of 14 air
separation units, we expect it to decrease each year at Linde. Therefore, for 2021 we see Linde’s
ratio at 4.0x, while we estimate Air Liquide to be at 5.3x. Even if we factor in the different forex
rates, Linde’s figure would be at 4.7x (in euro terms). We assume that ESG investors are not aware
of this divergent development.

Unrelated to this we expect relatively good results at Linde in Q3, eventually beating its own
expectation as well as market estimates. Moreover, the company could eventually lift its guidance
for 2020. In contrast, we see fx being a drag on Air Liquide’s earnings in the quarters to come. Thus,
in short term we are more optimistic on earnings development at Linde than at Air Liquide.

As a consequence, we prefer Linde over Air Liquide. Linde remains our most preferred stock in the
chemical sector and is part of our European Selected List.

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Company parts

 Air Liquide (Buy, TP EUR151): The hydrogen protagonist
 Linde (Buy, TP EUR252): Promising prospects

keplercheuvreux.com 57

#TPchange #HighConviction Release date: 08 October 2020

Air Liquide Buy Martin Roediger, CEFA
Co-Head of Chemicals
France | Chemicals +49 69 756 96 169
[email protected]

MCap: EUR62.6bn

Target Price: EUR151.00 (143.00) Change in TP: 5.6% Bloomberg: AI FP Reuters: AIRP.PA
Current Price: EUR132.80 Change in Sales: -2.2% 20E/-4.7% 21E Free float 100.0%
Up/downside: 13.7% Change in Adj EBIT: -0.5% 20E/-3.1% 21E Avg. daily volume (EURm) 217.1
Market data: 07 October 2020 Change in Adj. EPS: -0.6% 20E/-3.6% 21E YTD abs performance 5.2%
52-week high/low (EUR)
142.75/99.22

The hydrogen protagonist FY to 31/12 (EUR) 12/20E 12/21E 12/22E

Why this report? Sales (m) 20,093 20,602 21,738
Air Liquide is the market leader in merchant hydrogen by turnover. We expect EBITDA adj (m) 5,810 6,067 6,546
the company to double its hydrogen sales by 2030 thanks to its strong EBIT adj (m) 3,676 3,943 4,366
positioning along the entire value chain. We cut our EPS for 2020-22E by 1-5% Net profit adj (m) 2,227 2,484 2,835
due to the disposal of Schülke and some adverse forex effects. We lift our TP Net financial debt (m) 10,602 10,004 9,070
from EUR143 to EUR151 as we factor in detailed estimates for 2022-30. FCF (m) 3,621 1,714 2,128
Moreover, increased multiples help. Buy maintained. EPS adj. and ful. dil. 4.73 5.24 5.96
Consensus EPS 4.95 5.51 5.85
Key findings Net dividend 2.85 3.00 3.20

 Air Liquide is leading in hydrogen sales, despite “only” having 50 years’ experience. FY to 31/12 12/20E 12/21E 12/22E
 It is well positioned at all levels of the hydrogen value chain. Thus, it is a one-stop-
P/E adj and ful. dil. 28.1 25.3 22.3
shop for its customers. EV/EBITDA 13.7 13.1 12.0
EV/EBIT 21.7 20.1 18.0
 We expect Air Liquide’s hydrogen business to double to EUR4bn by 2030E. We FCF yield 5.8% 2.7% 3.4%
Dividend yield 2.1% 2.3% 2.4%
envisage a shift towards green and blue hydrogen, away from grey. A “wild card” ND(F+IFRS16)/EBITDA 2.1 1.9 1.6
could be a new CCS technology, cutting CO2 emissions by nearly 100%. Gearing 51.7% 45.7% 38.5%
ROIC 8.6% 9.1% 9.9%
Deconstructing the forecasts EV/IC 2.5 2.4 2.4

 We cut our EPS for 2020-22E by 1-5% due to the disposal of Schülke and adverse Sector Most Pref. Sector Least Pref.
Linde AkzoNobel
forex effects, impacting H2 2020E and H1 2021E.

 We value Air Liquide based on the average of the fair values by DCF analysis as well

as peer group comparison. We raise our TP from EUR143 to EUR151, driven by more
concrete earnings estimates for 2022-30 and increased multiples. Buy rating
maintained. In a direct comparison, we prefer Linde over Air Liquide.

Investment case Valuation methodology

With the current uncertainties about the trade war and its Our target price (EUR151) is derived from the average of

impact, investors are seeking safe-haven stocks. Air Liquide two valuation tools: 1) a DCF analysis (WACC: 6.0%,
has a defensive profile, given its 29% exposure to the take- terminal growth: 3%), and 2) a peer group comparison.
or-pay business (largely tonnage), 17% exposure to
healthcare, and 6% exposure to food and pharmaceuticals. We wonder why Air Liquide’s shares trade with a valuation
It also has some rental income in cylinders.
discount to its peer Linde plc despite having a similar
The company posted a very resilient earnings performance structure.

during the 2008-09 crisis, with the stock outperforming the Risks to our rating
chemical sector over that period. Air Liquide offers an
opportunity to preserve capital. Upward change in discount rates could be an issue, as such

Air Liquide's margins are set to rise even further given: 1) a growth stock is valued by many investors using a DCF
analysis.
efficiency gains, 2) price increases, and 3) portfolio
optimisation. Any crisis could affect top-line performance and thus

Catalysts reduce earnings prospects.

Solid quarterly results ahead. In the event of risk-on investment behaviour by the
Margin expansion to continue.
Price hike announcements by peers should be another financial market, the stock could underperform cyclical
chemical stocks.
trigger.

Air Liquide

IMPORTANT. Please refer to keplercheuvreux.com\disclaimer for keplercheuvreux.com
“Important disclosures” and analyst certification(s).
This research is the product of Kepler Cheuvreux, which is authorised
and regulated by the Autorité des Marchés Financiers in France.

Air Liquide Buy | Target Price: EUR151.00

The protagonist of hydrogen

Market leader in hydrogen-related sales (by value, not volume)
Air Liquide has c. 50 years’ experience in hydrogen, and has built long-standing relationships
with its clients. Over this period, the company has been a reliable supplier for its clients, which
has created trust. This is key for customers, as while industrial gases only account for 1-3% of
client costs, a production outage due to supply issues can easily cost several million dollars. Air
Liquide claims to be the market leader in terms of hydrogen-related sales (in EUR or USD terms,
not by volume).

We understand that its average selling price is higher than that of its peers, which is probably
related to two factors: 1) Air Liquide sells most of its hydrogen in Europe, where the price for
natural gas (raw material) is higher than in other regions such as the US; and 2) Air Liquide
operates 50 hydrogen refuelling stations (HRS) out of its 120 installed filling stations. Although this
activity is rather small given the number of fuel-cell cars currently in circulation, the selling price
for hydrogen at the pump is c. EUR10/kg, or c. USD10/kg, far above the usual USD1/kg for
industrial applications on the US Gulf Coast.

Air Liquide is active along the entire hydrogen value chain, including production, storage,
transport, distribution, and usage.

In production, the company operates 46 large hydrogen/carbon monoxide plants. Its setup
includes SMR, PSA, and POX plants, although no further details have been provided about this.
While the clear majority of Air Liquide’s hydrogen business is grey hydrogen, the company is also
making inroads into green hydrogen. It has acquired a 20% stake in electrolyser Hydrogenics
(which is now part of Cummins), and Air Liquide has also established a JV with this company,
which has enabled Air Liquide to expand its offering.

Air Liquide currently operates more than 40 electrolysers worldwide. While we assume its
combined annual capacity amounts to 20MW (500kW on average per electrolyser), this figure is
below Linde’s figure of over 80 electrolysers with a combined annual capacity of 40MW.
Nevertheless, Air Liquide is likely to catch up with Linde, as it is building a big electrolyser plant
with an annual capacity of 40MW in Becancour, Canada, which is scheduled to come into
operation by end-2020. The annual hydrogen output of this plant is just under 3,000 tonnes.

Air Liquide has the world’s biggest hydrogen pipeline network, which is 1,850km long. The
majority of the network is in Europe, followed by the US and Canada. It also has a small network
in Asia and the rest of the world.

Air Liquide is also active in hydrogen storage: the company claims to operate the world’s largest
hydrogen storage facility, in Beaumont, Texas (Spindletop). This facility is 1,500m deep and nearly
70m in diameter, and can store hydrogen from a large SMR unit for 30 days.

Air Liquide offers two services: compression of gaseous hydrogen and liquefaction of hydrogen.
We understand that liquefaction is more challenging. While Air Liquide does not disclose its
liquefaction capacity (in contrast to Linde), we assume it is below Linde’s capacity. However, Air
Liquide has one big liquefaction facility in Nevada (capacity: 30 tonnes a day) plus several small
facilities (Hylial). Air Liquide also offers hydrogen purification services, which is an important
process if the hydrogen is fossil-based.

Air Liquide has installed over 120 hydrogen refuelling stations (HRS). Its market share in HRS
is 28% out of the worldwide total (432 stations). While the company operates 50 HRS, operating
an HRS is not in the business models of either Linde or Air Liquide; both companies want to
sell technology.

Air Liquide’s innovative cold capture system (Cryocap) captures the CO2 released during
hydrogen production through a cryogenic process (we explain this technology in detail on page
14). Air Liquide is convinced that up to 90% of the released CO2 can be captured.

A very interesting new technology in carbon capture and storage (CCS) is Air Liquide’s CO2
adsorption with an amine unit. Air Liquide says this technology could reduce the CO2 emissions
related to the SMR (steam methane reforming) process by nearly 100%. Once this technology is

keplercheuvreux.com 59

Air Liquide Buy | Target Price: EUR151.00

established on a large scale, this could be a viable alternative to green hydrogen and could
establish blue hydrogen as an important source of supply in the future.
Air Liquide also offers natural gas treatment technology, which reduces CO2 emissions. Beside
MEDAL membrane and Porogen PEEK-Sep membranes, an exciting technology could be
adsorption with amines. This technology (most likely in combination with membrane
technologies as a pre-treatment) claims to reduce the CO2 emissions of grey hydrogen by nearly
100%. If this is achieved in large-scale production, we believe it could be a game-changer for
hydrogen, as it could make grey hydrogen as clean as green hydrogen.
We expect a 100% jump in hydrogen sales
Air Liquide has many decades of experience and expertise in hydrogen. It has established long-
standing relationships with customers, and has proven itself to be a reliable supplier, which is key
for clients. Air Liquide also offers top-notch technology in grey hydrogen.
The company’s blue hydrogen technology looks very promising and could prove to be
revolutionary in the field of hydrogen. In addition, Air Liquide secured pioneering technology in
green hydrogen through its stake in (and joint venture with) Hydrogenics. Moreover, Air Liquide
has the firepower to invest in large hydrogen projects, and we see it as a supplier of choice. As a
consequence, we think that the company is well positioned to exploit growth opportunities in
hydrogen. We expect Air Liquide to double its hydrogen volumes by 2030E, equivalent to a 7.2%
CAGR over 2020-30E.

Chart 60: Air Liquide - estimated hydrogen volumes 2020-30E

Source: Kepler Cheuvreux

With the switch towards blue and green hydrogen, we expect the average weighted price for
hydrogen to rise temporarily during 2030. However, the average price in 2030 is likely to return to
the levels seen in 2020.

keplercheuvreux.com 60

Air Liquide Buy | Target Price: EUR151.00

Chart 61: Air Liquide - estimated hydrogen sales

Source: Kepler Cheuvreux

Accordingly, we assume Air Liquide’s sales could double to EUR4bn by 2030E, so we expect its
sales exposure to hydrogen to rise from c. 9% in 2019 to c. 14% by 2030E thanks to a CAGR of 7.4%.

Buy, target price up from EUR143 to EUR151

We cut our EPS estimates for 2020-22E
Air Liquide exceeded market expectations at its H1 reporting. EPS rose by 2% YOY in H1 and thus
was 3% above market expectations (and 4% above our estimate). Air Liquide posted stable YOY
adj. EBIT, like Linde in Q2. However, assuming a similar trajectory to its peer and using the
cashflow (before working capital changes) performance in Q1 as a proxy for earnings, we assume
that Air Liquide’s EBIT was slightly down YOY in Q2.

Despite lower sales, earnings have been resilient due to the company’s robust business model. Air
Liquide reiterated its guidance for net profit (excluding forex effects and book gains from
disposals) to be close to last year’s level.

Nevertheless, we cut our EPS for 2020-22E by 1-5% due to: 1) the disposal of the company’s
hygiene business, Schülke (deconsolidated as of 1 July); and 2) adverse forex effects (primarily
driven by the US dollar), which are set to burden earnings in H2 2020E and H1 2021E. On page 51,
we provide more details about the change in our earnings estimates and how we differ from
consensus.

Updated model for 2022-30
Given the favourable prospects for hydrogen, we now apply detailed earnings estimates for 2022-
30E, which makes a difference for the DCF analysis later on. So far, we have used our terminal
growth rate assumption of 3% for the period beyond 2022E. For 2022-30E, we now factor in 4%
annual top-line growth, 5.8% annual EBITDA growth, and 8.0% annual EPS growth. Our terminal
growth rate assumption of 3% remains the same, but becomes effective as of 2031 (vs. 2023
previously).

Buy, target price up from EUR143 to EUR151
For Air Liquide, we use the same valuation approach as we did for Linde. We base our target price
on the average of a DCF analysis and a peer group comparison. Due to 2% higher earnings
estimates as well as the more detailed (and thus higher) estimates for 2022-30E, our fair value
based on a DCF analysis moves up to EUR156.

The peer group for Air Liquide is similar to Linde’s. Beside Air Products and Tayio Nippon Sanso,
Linde is among Air Liquide’s peers. We calculate a fair value of EUR147 per Air Liquide share, which
includes a 9% premium derived from the average of superior ROCE but inferior EBITDA margin.

The average of the fair values from a DCF analysis and a peer group comparison is EUR151. This is
our new target price, up 6% versus our previous TP of EUR143. We keep our Buy rating. Details of
all our valuation tools are included on pages 53-54.

keplercheuvreux.com 61

Air Liquide Buy | Target Price: EUR151.00

Company description Management 5.02%
2.86%
Founded in 1902, Air Liquide began as an idea to produce oxygen industrially using Benoit Potier 1.73%
liquid air. Today, Air Liquide is the global number two player in industrial gases. The Fabienne Lecorvaisier
company generated sales of EUR21bn in 2018. 96% of it sales is with industrial gases. Michael J. Graff 44%
Here Americas accounts for 40% of revenues, followed by Europe (35%), Asia (22%)
and Middle East/Africa (3%).The product split is as follows: 46% in industrial Key shareholders
merchant, 28% in Large Industries, 17% in Healthcare and 9% in Electronics. Blackrock
Vanguard
Artisan

Key data charts

Price performances Sales split by region Sales split by division

150 Eu ro zon e
140
130 Europe ex 1.09.%9% Ind us trial 4%
120 Eu ro zon e Merch ant 17%
110 North America 22.6% 32.5% Large Industries
100 3.0% 9%
90 Latam 5.0% Elec tro nic s
80 As ia

Oct 19 Apr 20 Oct 20 Middle Ea st 34.1% Healthcare 26%
Price DJ Stoxx 600 (rebased) Af ric a

Others

FCF Sales and EBITDA margin FCF and Capex to sales

4,000.0 7.0% 25,000.0 Sales-CAGR3Y based on last est.:-0.28% 35.0% 20% 18%
3,500.0
3,000.0 6.0% 30.0% 16%
2,500.0 25.0%
2,000.0 5.0% 20,000.0 20.0% 15% 14%
1,500.0 15,000.0 12%
1,000.0 4.0%
15.0% 10% 10%
500.0 3.0% 10.0% 8%
0.0 10,000.0 5.0%
2.0% 5,000.0 6%
5% 4%
1.0%
2%
0.0%
15 16 17 18 19 20E 21E 22E 0.0 0.0% 0% 0%
Att. FCF (m) (LHS) 15 16 17 18 19 20E 21E 22E 15 16 17 18 19 20E 21E 22E
Att. FCF Yield
Sales (m) (LHS) EBITDA margin FCF to sales (LHS) Capex to sales

SWOT analysis Weaknesses

Strengths High exposure to Electronics leads to some cyclicality

Global number two in industrial gas market Relatively high dependency on (low-growth, mature)
Europe
Sizable exposure to defensive onsite business (Large
Industries: 28% of gas) High exposure to Japan, a low growth country

Low exposure to cyclical engineering business Exposure to low-margin hard goods business after Airgas
takeover
Superb track record in growth for sales, earnings, and
dividend

Opportunities Threats

Secular growth in healthcare could boost performance Risk of softening industrial production growth to weigh on
top line
Innovations in electronics to continue with strong
performance Risk that customers could delay investment projects

New contracts signed will support growth in Large Potential price decline in regulated healthcare markets
Industries
Any downturn could affect cyclical part of electronics biz
Opportunities to raise selling prices even further

Price performance sSa les split by regi onSale s spl it by divisi onFCFSale s and EBITDA margi nFCF and Capex to sale s

keplercheuvreux.com 62

Air Liquide Buy | Target Price: EUR151.00

Key financials 12/13 12/14 12/15 12/16 12/17 12/18 Market data as of: 07 October 2020
12/19 12/20E 12/21E 12/22E
FY to 31/12 (EUR)
15,225 15,358 15,819 18,135 20,349 21,011 21,920 20,093 20,602 21,738
Income Statement (EURm)
Sales -0.7% 0.9% 3.0% 14.6% 12.2% 3.3% 4.3% -8.3% 2.5% 5.5%
% Change 3,817 3,873 4,216 4,611 5,142 5,215 5,931 5,810 6,067 6,546
EBITDA adjusted
EBITDA adj. margin (%) 25.1% 25.2% 26.6% 25.4% 25.3% 24.8% 27.1% 28.9% 29.4% 30.1%
EBIT adjusted 2,581 2,634 2,856 3,024 3,364 3,449 3,794 3,676 3,943 4,366
EBIT adj. margin (%)
Net financial items & associates 16.9% 17.1% 18.1% 16.7% 16.5% 16.4% 17.3% 18.3% 19.1% 20.1%
Others -305 -251 -262 -403 -489 -353 -468 -427 -367 -315
Tax
Net profit from continuing operations 15 4 14 7 5 0 0 0 0 0
Net profit from discontinuing activities -612 -678 -662 -747 -207 -731 -802 -805 -895 -1,017
Net profit before minorities
Net profit reported 1,705 1,725 1,824 1,916 2,329 2,203 2,337 2,323 2,581 2,934
Net profit adjusted
0 0 15 11 -37 0 0 0 0 0
Cash Flow Statement (EURm) 1,705 1,725 1,839 1,927 2,292 2,203 2,337 2,323 2,581 2,934
Levered post tax CF before capex
Capex 1,640 1,665 1,756 1,844 2,200 2,113 2,241 2,227 2,484 2,835
Free cash flow 1,640 1,665 1,756 1,844 2,200 2,113 2,241 2,227 2,484 2,835
Acquisitions & divestments
Dividend paid 2,803 2,830 2,832 3,697 4,254 4,716 4,712 5,761 4,922 5,452
Others
Change in net financial debt -2,231 -1,836 -2,028 -2,259 -2,183 -2,155 -2,732 -2,140 -3,209 -3,324
572 993 805 1,438 2,072 2,562 1,980 3,621 1,714 2,128
Balance Sheet (EURm)
Intangible assets -110 137 -253 -11,336 337 -94 96 -50 0 0
Tangible assets -743 -766 -837 -884 -933 -1,126 -1,130 -1,272 -1,342 -1,421
Financial & other non-current assets
362 -545 -636 2,548 379 -573 -703 -1,328 226 226
Total shareholders' equity
Pension provisions -81 181 922 8,234 -1,854 -769 -243 -970 -597 -933
Liabilities and provisions
5,803 6,023 6,579 15,777 14,451 14,944 15,498 15,941 16,384 16,828
Net debt 13,226 14,554 15,706 20,116 18,526 19,248 21,118 20,552 21,013 21,533
Net financial debt 2,258 2,308 2,306 2,306
IFRS 16 debt 800 675 764 832 839 787
Net working capital 19,324 20,521 21,905 23,561
Invested capital 10,888 11,827 12,771 17,125 16,718 18,207 2,790 2,557 2,622 2,766
2,287 2,463 2,384 2,872 2,926 2,736 22,953 22,275 22,273 22,454
Per share data (EUR) 11,920 12,435 13,786 24,121 21,383 21,037
EPS adjusted 15,419 13,707 13,173 12,384
EPS adj and fully diluted 7,997 8,352 8,117 16,864 16,642 13,578 12,082 10,602 10,004 9,070
% Change 5,710 5,889 6,270 14,634 14,501 11,695 1,400 1,400 1,400 1,400
EPS reported
Cash flow per share 0 0 0 0 0 0 740 683 678 691
Book value per share 2,046 1,828 2,199 2,726 2,633 2,113 31,837 31,588 32,419 33,325
Dividend per share 16,950 18,133 20,010 32,493 30,089 30,742
Number of shares, YE (m)
3.95 4.00 4.11 4.21 4.68 4.49 4.76 4.73 5.24 5.96
Ratios
ROE (%) 3.95 4.00 4.11 4.21 4.68 4.49 4.76 4.73 5.24 5.96
ROIC (%) -2.1% 1.3% 2.8% 2.4% 11.1% -4.0% 5.9% -0.6% 10.9% 13.8%
ND(F+IFRS16) / EBITDA (x)
Gearing (%) 3.95 4.00 4.11 4.21 4.68 4.49 4.76 4.73 5.24 5.96
6.74 6.80 6.63 8.44 9.05 10.02 10.00 12.23 10.38 11.47
Valuation
P/E adjusted 25.56 27.71 29.05 38.23 34.70 37.79 40.05 42.59 45.25 48.60
P/E adjusted and fully diluted
P/BV 1.85 2.04 2.09 2.14 2.40 2.40 2.70 2.85 3.00 3.20
P/CF 415.70 416.37 427.12 437.94 470.27 470.56 471.21 471.21 474.04 475.46
Dividend yield (%)
Dividend yield preference shares (%) 15.8% 15.0% 14.7% 12.7% 13.3% 12.4% 12.2% 11.4% 12.0% 12.7%
FCF yield (%)
EV/Sales 11.3% 10.8% 11.0% 8.3% 7.6% 8.5% 9.0% 8.6% 9.1% 9.9%
EV/EBITDA adj. 1.5 1.5 1.5 3.2 2.8 2.2 2.3 2.1 1.9 1.6
EV/EBIT adj.
52.4% 49.8% 49.1% 85.5% 86.7% 64.2% 62.5% 51.7% 45.7% 38.5%

18.1 19.0 22.2 18.6 19.3 21.6 23.0 28.1 25.3 22.3
18.1 19.0 22.2 18.6 19.3 21.6 23.0 28.1 25.3 22.3

2.8 2.7 3.1 2.0 2.6 2.6 2.7 3.1 2.9 2.7
10.6 11.2 13.8 9.3 10.0 9.7 11.0 10.9 12.8 11.6

2.6% 2.7% 2.3% 2.7% 2.7% 2.5% 2.5% 2.1% 2.3% 2.4%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
1.9% 3.1% 2.1% 4.2% 4.9% 5.6% 3.8% 5.8% 2.7% 3.4%

2.6 2.7 3.1 2.9 3.0 2.9 3.2 4.0 3.9 3.6
10.2 10.6 11.7 11.5 12.0 11.9 11.8 13.7 13.1 12.0

15.0 15.6 17.3 17.6 18.3 18.0 18.5 21.7 20.1 18.0

keplercheuvreux.com 63

#TPchange #HighConviction Release date: 08 October 2020

Linde Buy Martin Roediger, CEFA
Co-Head of Chemicals
Germany | Chemicals +49 69 756 96 169
[email protected]

MCap: EUR106.2bn

Target Price: EUR252.00 (225.00) Change in TP: 12.0% Bloomberg: LIN GR Reuters: LINI.DE
Current Price: EUR201.90 Change in Sales: 0.5% 20E/0.5% 21E Free float 100.0%
Up/downside: 24.8% Change in Adj EBIT: 3.1% 20E/1.9% 21E Avg. daily volume (EURm) 671.4
Market data: 07 October 2020 Change in Adj. EPS: 8.0% 20E/6.1% 21E YTD abs performance 5.8%
52-week high/low (EUR)
217.10/139.20

Promising prospects FY to 31/12 (USD) 12/20E 12/21E 12/22E

Why this report? Sales (m) 26,096 27,470 28,933
Linde is a strong merchant player in hydrogen, where its prospects appear to EBITDA adj (m) 8,136 9,074 9,799
be favourable given the high order intake for hydrogen projects. Given its EBIT adj (m) 5,276 6,045 6,611
positioning, we see the company as well positioned to capture growth Net profit adj (m) 4,100 4,748 5,248
opportunities in hydrogen. We see earnings and margins continuing to grow Net financial debt (m) 12,551 11,525 9,660
this year and beyond, despite the crisis. We lift our EPS estimates by 6-8% for FCF (m) 3,395 4,167 4,599
2020-22E and raise our TP from EUR225 to EUR252. Buy rating reiterated. The EPS adj. and ful. dil. 7.79 9.10 10.10
stock is our Most Preferred name in the chemicals space. Consensus EPS 7.43 8.81 9.69
Net dividend 3.85 4.05 4.25
Key findings
FY to 31/12 12/20E 12/21E 12/22E
 Linde is among the top players in hydrogen. Its strong order intake for hydrogen
P/E adj and ful. dil. 30.5 26.1 23.5
projects makes the company confident about the prospects in that area. EV/EBITDA 16.2 14.4 13.2
EV/EBIT 24.9 21.7 19.5
 The company is active at all levels of the hydrogen value chain, being a one-stop- FCF yield 2.7% 3.4% 3.7%
Dividend yield 1.6% 1.7% 1.8%
shop for its clients. ND(F+IFRS16)/EBITDA 1.5 1.3 1.0
Gearing 26.6% 24.4% 19.9%
 We see good chances of Linde’s hydrogen business doubling until 2030E, with a ROIC 6.3% 7.2% 8.0%
EV/IC 2.1 2.1 2.1
gradual shift towards green and blue hydrogen, and away from grey.
Sector Most Pref. Sector Least Pref.
Deconstructing the forecasts Linde AkzoNobel

 We lift our EPS estimates by 6-8% for 2020-22E thanks to better-than-assumed Q2

results and increased guidance for 2020.

 Our valuation is based on an average of the fair values by DCF analysis as well as

peer group comparison. Thus, we lift our TP from EUR225 to EUR252. Our rating
remains a Buy. Linde is our Sector Most Preferred stock in the chemicals space.

Investment case Valuation methodology

Industrial gas companies have proven to be resilient due to We obtain an unweighted average fair value of USD295,

their tonnage (long-term contracts, take-or-pay) and based on the average of the fair values derived from a DCF
healthcare activities. Investors benefit from ongoing solid analysis (WACC: 6%, and TG: 3%) and a peer group
earnings growth, thanks to margin expansion on the back comparison.
of cost savings and efficiency gains.
Dividing this figure by the current exchange rate of 1.17 is
Linde is a high-quality stock, offering investors the
equivalent to EUR252.
opportunity to preserve capital. We see a good chance that
Linde could exceed its targeted cost synergies (USD900m). Hence, we derive a TP of EUR252.

Moreover, earnings should rise thanks to its pricing policy. Risks to our rating

On top comes chances for "decaptivation" (M&A) and/or A massive trade war between the US and China would
share buyback. Thus, the EPS growth trajectory is set to
continue. adversely impact Linde too.

Catalysts Any change in discount rates would affect the DCF model

Solid quarterly results should trigger upward revisions at and thus fair value.

consensus. An unexpected resignation of the CEO would be a negative

Price hike announcements by Linde or its peers should surprise.

suppport share price.

Any lift in guidance should support share price.

Linde

IMPORTANT. Please refer to keplercheuvreux.com\disclaimer for keplercheuvreux.com
“Important disclosures” and analyst certification(s).
This research is the product of Kepler Cheuvreux, which is authorised
and regulated by the Autorité des Marchés Financiers in France.

Linde Buy | Target Price: EUR252.00

Promising prospects

Strong positioning with long-term experience
Linde has been active in hydrogen for more than 100 years. Thus, it has built up long-lasting
relationships with its clients over that period, in which it has proven to be a reliable supplier. This
is very important for customers, as although industrial gases account for just 1-3% of clients’
costs, an outage in production due to supply issues could easily cost several million US dollars.
Linde claims to be the market leader in sold hydrogen molecules (in volumes, not sales). Our
understanding is that its average selling price in hydrogen is lower than that of peers, most likely
as much of its business is in the US, where the natural gas (raw material) price is low.

In any case, we see the company among the top three merchant players in terms of hydrogen-
related sales worldwide. It is active along the whole value chain in hydrogen, from production to
storage, transportation and distribution, as well as usage – just like its competitor Air Liquide.

In production, it runs 170 SMR and PSA plants. By far the majority of these produce grey hydrogen.
However, the company is making inroads into green hydrogen. Linde has acquired a 19% stake in
ITM Power and created a JV with this electrolyser company, enabling it to expand its offering. So
far, Linde runs more than 80 electrolysers worldwide with capacity of 40MW. On average, its
electrolysers have capacity of 500kW. This is in contrast to Air Liquide, which runs just 40
electrolysers, for which we estimate 20MW capacity. However, the French company is in the
process of catching up with Linde’s electrolyser capacity by building a 40MW electrolyser plant in
Becancour, Canada by end-2020.

Linde is also active in hydrogen storage. It commands one of the four hydrogen caverns in the
world, located in Moss Bluff, US. We understand that this is smaller than Air Liquide’s hydrogen
cavern in Spindletop, US.

Linde has technology for compressing gaseous hydrogen. In our view, the other hydrogen
treatment technology, liquefaction, is more challenging. Linde seems to be very strong in
liquefaction technology. We have deduced that it runs big volume liquefaction facilities. Its
liquefaction capacity is 170 tonnes per day. We believe that this capacity is higher than that of Air
Liquide, which only mentioned one big liquefaction technology in Nevada (capacity: 30 tonnes per
day), besides several small offerings (Hylial).

In terms of hydrogen pipelines, Linde claims to have a network of around 1,000 km. The majority
of the network is in the US/Canada, followed by Europe, while its network in Asia and rest of the
world is very small. With this, Linde ranks number three in the global hydrogen pipeline network.
Moreover, Linde runs c. 1,600 bulk vehicles to transport hydrogen to its clients.

Linde has installed c. 190 hydrogen refuelling stations (HRS). Thus, it is the market leader in
building HRS, with a share of 44% of total installed HRS (432) in the world. We do not know how
many of the built HRS are operated by Linde. In any case, neither Linde’s nor Air Liquide’s business
models contemplate running an HRS. Both companies want to sell technology. Nevertheless,
Linde will run the HRS for the 14-passenger trains in Bremervörde, Germany.

Other technologies that are part of Linde’s hydrogen offering include purification, which is quite
important if the hydrogen is fossil-based. Besides this, Linde is active in carbon capture, e.g. with
its RECTICOL offering. Moreover, it has joined forces with RWE and BASF on post combustion
capture (PCC) technologies, allowing it to use CO2 for food/beverage, for oil-enhanced recovery,
or as feedstock for methanol and urea. This enables Linde to offer carbon capture and storage
(CCS), as well as carbon capture and usage technology.

Doubling hydrogen sales by 2030 is likely
Given the company’s long-term experience and know-how, its proven, reliable supply to
customers over many decades, and its production technologies in grey, blue and green hydrogen
as well as in storage, transportation, distribution and end-use applications, we see Linde as well
positioned to capture growth opportunities in hydrogen going forward. We expect Linde to double
its hydrogen volumes by 2030.

keplercheuvreux.com 65

Linde Buy | Target Price: EUR252.00

Chart 62: Expected hydrogen volume evolution at Linde (m tonnes)

Source: Kepler Cheuvreux

We expect a gradual shift from grey hydrogen to blue and green hydrogen in the years to come.
Temporarily, the average selling price in hydrogen is expected go up, as green is still far more
expensive than grey or blue hydrogen. However, we expect the average price (weighted by
volumes) in 2030 to be on par with the level seen in 2020.
As a consequence, we expect hydrogen sales at Linde to double to above USD4bn by 2030. This
represents a CAGR of 7.2% for 2020-30E.

Chart 63: Expected hydrogen sales evolution at Linde (USDm)

Source: Kepler Cheuvreux

With this, Linde’s sales exposure to hydrogen would rise from 7% in 2019 to 11% in 2030.

Target price raised from EUR225 to EUR243; Buy rating maintained

Increase in earnings estimates
Linde has beaten market expectations for adj. EPS in Q2 2020 by 16% (18% above our estimate).
Moreover, it was one of the very few companies in the chemical sector that has been able to
increase its earnings in Q2 2020 YOY. Adj. EPS grew by 4% YOY to USD1.90 in Q2. Thus, Linde is
guiding for an adj. EPS of USD1.90-1.95 in Q3 and guides for an adj. EPS of USD7.60-7.80 in FY 2020.
As a result, we lift our EPS estimates by 6-8%. We are 5-6% above consensus at the EPS level. On
page 50 of this report, we provide more details about the change in our earnings estimates, as well
as how we deviate from consensus. Thus, we will not repeat those tables here.

keplercheuvreux.com 66

Linde Buy | Target Price: EUR252.00

Updated model for 2022-30E
Given the favourable prospects for hydrogen, we now apply detailed earnings estimates for 2022-
30E. This will make a difference for the DCF analysis later on. So far, we have used our terminal
growth rate assumption of 3% for the time beyond 2022E. For 2022-30E, we now factor in top-line
growth of 3.8% per year, EBITDA growth of 5.7% per year and EPS growth of 7.1% per year. Our
terminal growth rate assumption of 3% remains the same but now becomes effective as of 2031E
(previously: 2023E).

Target price raised from EUR225 to EUR252; Buy rating maintained
We value Linde based on two valuation methods: a DCF analysis and a peer group comparison.
Due to 6-8% increases to our earnings estimates, as well as the more detailed (and thus higher)
estimates for 2022-30E, our fair value based on a DCF analysis moves up to USD318. The fair value
based on a peer group comparison now stands at USD272 per share. The average of USD295 is
divided by the current forex rate of 1.17. Thus, our target price now stands at EUR252, up by 12%
compared to our previous target price of EUR225. We show all valuation tools in detail on pages
51-52 on this report. Thus, we will not repeat them here.

Likely beat in Q3 results and guidance increase should be supportive for share price
Linde remains our Most Preferred Stock in the chemical sector. We prefer Linde over Air Liquide.
In the short term, we see a good chance that Linde could surprise on the upside in its Q3 results
publication. The current weakness of the US dollar is actually favourable for Linde’s earnings, as
the company reports in dollars. For the euro-denominated share price in Frankfurt, however,
there is a dilution effect from the currency.

Moreover, we see a chance that Linde could again raise its full year target for 2020, supported by
more favourable forex effects and accelerated cost savings. Our experience tells us that a beat of
quarterly results and a guidance upgrade would normally be supportive for the share price.

Political risks
The biggest risk to our rating clearly stems from politics. The elections in the US are coming up.
We fear that in the event of a head-to-head race between Trump and Biden on 3 November 2020,
Trump could declare himself the winner that night, despite the fact that postal votes will not have
been counted at that point, as that takes time. This would give rise to a democratic crisis, which is
certainly not favourable for the stock market. As a consequence, the whole US stock market could
come down. Linde is seen as a US stock. Thus, it would certainly suffer from a potential broad-
based sell-off in the stock market.

However, Linde would not be the only one to suffer from such an effect. What many people may
not know is that Linde’s sales exposure to the US is “just” 29%. In contrast, Air Liquide’s sales
exposure to the US is even higher, at 33%.

keplercheuvreux.com 67

Linde Buy | Target Price: EUR252.00

Company description Management 5.31%
5.14%
Linde plc is the global number one in industrial gases after the merger between Linde Steve Angel
AG and Praxair Inc. Moreover, it is one of the most profitable engineering companies. Matt White 2.99%
Linde products and services can be found in nearly every industry, in more than 100 Sanjiv Lamba, head of Asia 2.73%
countries. This success story began with the separation of air 130 years ago when Carl
von Linde invented refrigeration. Key shareholders
Blackrock
Norges Bank Investment Mgmt.
Artisan Partners
Dodge & Cox

Key data charts

Price performances Sales split by region Sales split by division

220 Eu ro zon e
210
200 Europe ex 2.03%.0% 18.0% Industrial Gases 7%
190 Eu ro zon e 8.0% 10%
180 North America
170 24.0%
160 Latam
150
140 As ia 9.0% Engineering and
130 Middle Ea st Contracting
120 Apr 20 Oct 20 Af ric a 36.0% 83%
DJ Stoxx 600 (rebased) Others
Oct 19

Price

FCF Sales and EBITDA margin FCF and Capex to sales

5,000.0 9.0% 35,000.0 Sales-CAGR3Y based on last est.:0.90% 40.0% 18% 16%
4,000.0 8.0%
3,000.0 7.0% 30,000.0 35.0% 16% 14%
2,000.0 6.0% 25,000.0 30.0%
1,000.0 5.0% 20,000.0 25.0% 14% 12%
4.0% 15,000.0 20.0%
0.0 3.0% 10,000.0 15.0% 12% 10%
2.0% 5,000.0 10.0% 10%
1.0% 5.0% 8% 8%
0.0%
19 20E 21E 22E 6% 6%
Att. FCF Yield
4% 4%

2% 2%

15 16 17 18 0.0 0.0% 0% 0%
Att. FCF (m) (LHS) 15 16 17 18 19 20E 21E 22E 15 16 17 18 19 20E 21E 22E

Sales (m) (LHS) EBITDA margin FCF to sales (LHS) Capex to sales

SWOT analysis Weaknesses
Some exposure to cyclical engineering
Strengths Integration process could weigh on mood of employees
Global number one in industrial gases High exposure to weak Australia and Latin America
High exposure to healthcare (22% of gas) is a big plus High exposure to electronics (perceived to be cyclical)
Strong positioning in US healthcare market
Strong cash flow generator, continuous share buyback

Opportunities Threats
Synergies to substantially improve profitability
Pricing actions to improve earnings and margins Risk of a competitive bidding (CB) round 4
Share buybacks to support EPS growth
Chance for normalisation in US homecare market Eventually unfavourable regional mix, underperforming its
peers
Price performance sSa les split by regi onSale s spl it by divisi onFCFSale s and EBITDA margi nFCF and Capex to sale s
Uncertain economy could be a drag on growth rate in gas
business

Potential downturn could severely affect engineering
business

keplercheuvreux.com 68

Linde Buy | Target Price: EUR252.00

Key financials 12/13 12/14 12/15 12/16 12/17 12/18 Market data as of: 07 October 2020
12/19 12/20E 12/21E 12/22E
FY to 31/12 (USD)
16,655 17,047 17,345 28,682 26,896 28,084 28,163 26,096 27,470 28,933
Income Statement (USDm)
Sales 9.0% 2.4% 1.7% 65.4% -6.2% 4.4% 0.3% -7.3% 5.3% 5.3%
% Change 3,966 3,920 4,087 4,098 7,187 7,603 8,178 8,136 9,074 9,799
EBITDA adjusted
EBITDA adj. margin (%) 23.8% 23.0% 23.6% 14.3% 26.7% 27.1% 29.0% 31.2% 33.0% 33.9%
EBIT adjusted 2,171 2,180 2,221 3,978 4,491 4,796 5,272 5,276 6,045 6,611
EBIT adj. margin (%)
Net financial items & associates 13.0% 12.8% 12.8% 13.9% 16.7% 17.1% 18.7% 20.2% 22.0% 22.8%
Others -377 -365 -397 -390 116 -162 205 215 283 358
Tax
Net profit from continuing operations 0 0 0 0 0 0 0 0 0 0
Net profit from discontinuing activities -364 -358 -396 -865 -593 -670 -749 -649 -984 -1,150
Net profit before minorities
Net profit reported 1,430 1,162 1,236 2,499 1,519 1,729 2,389 2,202 3,303 3,879
Net profit adjusted
0 0 0 0 0 0 0 0 0 0
Cash Flow Statement (USDm) 1,430 1,162 1,236 2,499 1,519 1,729 2,389 2,202 3,303 3,879
Levered post tax CF before capex
Capex 1,317 1,102 1,149 2,537 1,282 1,729 2,300 2,198 3,302 3,878
Free cash flow 1,317 1,324 1,267 2,719 3,171 3,433 4,003 4,100 4,748 5,248
Acquisitions & divestments
Dividend paid 3,069 3,001 3,593 6,615 6,971 3,654 6,119 6,637 7,676 8,326
Others
Change in net financial debt -1,069 -2,063 -1,795 -4,187 -3,807 -1,883 -3,682 -3,242 -3,509 -3,726
2,000 938 1,798 2,428 3,164 1,771 2,437 3,395 4,167 4,599
Balance Sheet (USDm)
Intangible assets 648 -338 100 -724 397 748 0 0 0 0
Tangible assets -480 -558 -585 -640 -1,639 -1,737 -1,832 -1,908 -2,025 -2,113
Financial & other non-current assets
-1,367 -361 -612 -10,679 6,702 -1,237 -717 -4,662 -1,116 -621
Total shareholders' equity
Pension provisions -801 319 -701 9,616 -8,624 455 111 3,176 -1,026 -1,865
Liabilities and provisions
13,471 13,977 14,364 37,536 43,261 43,097 43,156 42,309 41,440 40,548
Net debt 11,384 12,151 12,782 29,137 31,129 29,717 29,064 28,559 28,214 27,999
Net financial debt 2,632 1,017 5,498
IFRS 16 debt -994 -426 -495 125 125 125 125
Net working capital 43,267 55,242 57,080
Invested capital 13,586 14,267 15,449 1,485 2,380 0 51,522 47,154 47,317 48,461
1,027 1,265 1,068 37,864 38,814 0 0 0 0
Per share data ($) 18,136 18,893 18,830 36,306
EPS adjusted 18,918 11,189 35,090 35,550 35,773 35,999
EPS adj and fully diluted 9,226 9,463 8,713 17,433 8,809 10,830
% Change 8,199 8,518 7,817 9,264 11,256 14,432 13,406 11,541
EPS reported 0 0 9,375 12,551 11,525 9,660
Cash flow per share 0 0 0 -5,318 -6,807 0
Book value per share 505 53 -449 49,875 51,601 -4,314 0 0 0 0
Dividend per share 22,284 23,259 23,937 63,196 -3,862 -3,752 -3,451 -3,115
Number of shares, YE (m) 63,050 62,655 62,610 62,732

Ratios 7.08 7.13 6.82 4.93 5.71 6.19 7.34 7.79 9.10 10.10
ROE (%)
ROIC (%) 7.08 7.13 6.82 4.93 5.71 6.19 7.34 7.79 9.10 10.10
ND(F+IFRS16) / EBITDA (x) 0.7% 0.7% -4.3% -27.7% 15.8% 8.3% 18.7% 6.2% 16.7% 11.0%
Gearing (%)
7.08 5.94 6.19 4.60 2.31 3.12 4.22 4.18 6.33 7.46
Valuation 16.49 16.17 19.35 12.00 12.56 6.58 11.22 12.62 14.71 16.02
P/E adjusted
P/E adjusted and fully diluted 68.61 72.22 78.53 74.60 89.37 92.97 90.02 85.19 86.41 89.20
P/BV
P/CF 3.00 3.15 3.45 2.97 3.13 3.30 3.50 3.85 4.05 4.25
Dividend yield (%) 186.06 185.62 185.64 551.05 555.15 555.00 545.17 526.00 521.79 519.68
FCF yield (%)
EV/Sales 10.2% 10.1% 9.1% 9.8% 7.0% 6.8% 8.0% 8.7% 10.6% 11.5%
EV/EBITDA adj.
EV/EBIT adj. 7.5% 7.4% 7.3% 8.3% 6.8% 6.3% 6.3% 6.3% 7.2% 8.0%
2.1 2.2 1.9 4.3 1.2 1.2 1.1 1.5 1.3 1.0

60.3% 59.7% 50.6% 40.3% 15.9% 16.2% 18.2% 26.6% 24.4% 19.9%

16.6 18.2 17.1 23.0 23.0 25.4 25.5 30.5 26.1 23.5
16.6 18.2 17.1 23.0 23.0 25.4 25.5 30.5 26.1 23.5

1.7 1.8 1.5 1.5 1.5 1.7 2.1 2.8 2.7 2.7
7.1 8.0 6.0 9.5 10.5 23.9 16.7 18.8 16.1 14.8

2.6% 2.4% 3.0% 2.6% 2.4% 2.1% 1.9% 1.6% 1.7% 1.8%

9.2% 3.9% 8.3% 3.9% 4.3% 2.0% 2.4% 2.7% 3.4% 3.7%
2.0 2.1 1.9 2.9 3.5 3.4 4.1 5.0 4.8 4.5

8.3 8.9 7.9 20.4 13.3 12.7 14.1 16.2 14.4 13.2
15.1 16.1 14.5 21.0 21.3 20.1 21.8 24.9 21.7 19.5

keplercheuvreux.com 69

Chemicals

Research ratings and important disclosures

The term "KEPLER CHEUVREUX" shall, unless the context otherwise requires, mean each of KEPLER CHEUVREUX and its affiliates, subsidiaries and related companies (see
“Regulators” table below).

The investment recommendation(s) referred to in this report was (were) completed on 08/10/2020 15:00 (GMT) and was first disseminated on 09/10/2020 5:07 (GMT).

Unless otherwise stated, all prices are aligned with the “Market Data date” on the front page of this report.

Disclosure checklist - Potential conflict of interests

Company Name ISIN Disclosure

Air Liquide FR0000120073 nothing to disclose

BASF DE000BASF111 nothing to disclose

0 0 CACIB in cooperation with Kepler Cheuvreux acted as Sole Global Coordinator in the secondary placement of 25M shares in

Carrefour

Coca-Cola European GB00BDCPN049 nothing to disclose

Partners

Daimler DE0007100000 nothing to disclose

Dassault Aviation FR0000121725 nothing to disclose

DSM NL0000009827 nothing to disclose

Enagas ES0130960018 nothing to disclose

Engie FR0010208488 nothing to disclose

Equinor NO0010096985 nothing to disclose

Linde IE00BZ12WP82 nothing to disclose

Royal Dutch Shell GB00B03MLX29 nothing to disclose

RWE DE0007037129 nothing to disclose

Siemens DE0007236101 KEPLER CHEUVREUX and UniCredit Bank AG have entered into a Co-operation Agreement to form a strategic alliance in

connection with certain services including services connected to investment banking transactions. UniCredit Bank AG

provides investment banking services to this issuer in return for which UniCredit Bank AG has received a consideration or a

promise of consideration. Separately& through the Co-operation Agreement with UniCredit Bank AG for services provided

by KEPLER CHEUVREUX in connection with such activities& KEPLER CHEUVREUX has also a received consideration or a

promise of a consideration in accordance with the general terms of the Co-operation Agreement

UniCredit Bank AG holds or owns or controls 5% or more of the issued share capital of KEPLER CHEUVREUX. UniCredit Bank

AG provides investment banking services to this issuer in return for which UniCredit Bank AG has received a consideration or

a promise of consideration

A representative of UniCredit Bank AG serves on the board of directors of KEPLER CHEUVREUX

SNAM IT0003153415 nothing to disclose

Thyssenkrupp DE0007500001 nothing to disclose

Total FR0000120271 nothing to disclose

Uniper DE000UNSE018 nothing to disclose
Organizational and administrative arrangements to avoid and prevent conflicts of interests

KEPLER CHEUVREUX promotes and disseminates independent investment research and have implemented written procedures designed to identify and manage potential
conflicts of interest that arise in connection with its research business, which are available upon request. The KEPLER CHEUVREUX research analysts and other staff involved in
issuing and disseminating research reports operate independently of KEPLER CHEUVREUX Investment Banking business. Information barriers and procedures are in place
between the research analysts and staff involved in securities trading for the account of KEPLER CHEUVREUX or clients to ensure that price sensitive information is handled
according to applicable laws and regulations.

It is Kepler Cheuvreux’ policy not to disclose the rating to the issuer before publication and dissemination. Nevertheless, this document, in whole or in part, and with the exclusion
of ratings, target prices and any other information that could lead to determine its valuation, may have been provided to the issuer prior to publication and dissemination, solely
with the aim of verifying factual accuracy.

Please refer to www.keplercheuvreux.com for further information relating to research and conflict of interest management.

Analyst disclosures

The functional job title of the person(s) responsible for the recommendations contained in this report is Equity/Credit Research Analyst unless otherwise stated on the cover.

Name of the Research Analyst(s): Martin Roediger, CEFA

Regulation AC - Analyst Certification: Each Equity/Credit Research Analyst(s) listed on the front-page of this report, principally responsible for the preparation and content of
all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report with respect to an issuer or
security that the equity research analyst covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those
issuer(s) or securities. Each Equity/Credit Research Analyst(s) also certifies that no part of their compensation was, is, or will be, directly or indirectly, related to the specific
recommendation(s) or view(s) expressed by that equity research analyst in this research report.

Each Equity/Credit Research Analyst certifies that he is acting independently and impartially from KEPLER CHEUVREUX shareholders, directors and is not affected by any current
or potential conflict of interest that may arise from any KEPLER CHEUVREUX activities.

Analyst Compensation: The research analyst(s) primarily responsible for the preparation of the content of the research report attest that no part of the analyst’s(s’)
compensation was, is or will be, directly or indirectly, related to the specific recommendations expressed by the research analyst(s) in the research report. The research
analyst’s(s’) compensation is, however, determined by the overall economic performance of KEPLER CHEUVREUX.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of KEPLER CHEUVREUX, which is a non-US affiliate
and parent company of Kepler Capital Markets, Inc. a SEC registered and FINRA member broker-dealer. Equity/Credit Research Analysts employed by KEPLER CHEUVREUX, are
not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of Kepler Capital Markets, Inc. and may not be subject to NASD Rule 2711
and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

Research ratings

Rating ratio Kepler Cheuvreux Q2 2020 AB
Rating Breakdown

keplercheuvreux.com 70

Chemicals

Buy 49% 48%
Hold 35% 34%
Reduce 13% 10%

Not Rated/Under Review/Accept Offer 3% 8%
Total 100% 100%

Source: Kepler Cheuvreux

A: % of all research recommendations
B: % of issuers to which material services of investment firms are supplied

12 months rating history

The below table shows the history of recommendations and target prices changes issued by KEPLER CHEUVREUX research department (Equity and Credit) over a 12 months
period.

Company Name Date Business Line Rating Target Price Closing Price
Air Liquide (EUR)
BASF (EUR) 04/02/2020 08:01 Equity Research Buy 140.00 131.90
132.00 113.30
Carrefour (EUR) 03/04/2020 07:13 Equity Research Buy 143.00 131.60
Coca-Cola European Partners (EUR) 07/07/2020 07:17 Equity Research Buy 66.00
Daimler (EUR) 21/11/2019 13:45 Equity Research Hold 64.00 69.58
61.00 65.73
Daimler () 09/01/2020 09:24 Equity Research Hold 57.00 60.70
Daimler (EUR) 04/02/2020 08:03 Equity Research Hold 42.00 53.08
Dassault Aviation (EUR) 02/03/2020 08:17 Equity Research Hold 46.00 41.58
DSM (EUR) 51.00 49.75
03/04/2020 07:23 Equity Research Hold 19.40 49.65
Enagas (EUR) 28/05/2020 07:03 Equity Research Hold 17.40 13.03
Engie (EUR) 25/06/2020 07:06 Equity Research Hold 55.00 12.99
Equinor (NOK) 45.00 49.85
16/03/2020 08:29 Equity Research Buy 44.00 29.10
Linde (EUR) 27/05/2020 12:54 Equity Research Buy 58.00 33.40
25/10/2019 07:02 Equity Research Buy 56.00 52.06
Royal Dutch Shell (EUR) 53.00 50.68
Royal Dutch Shell () 25/03/2020 08:06 Equity Research Buy 47.00 49.68
Royal Dutch Shell (EUR) 25/06/2020 08:35 Equity Research Buy 35.00 42.63
RWE (EUR) 25/10/2019 07:25 Equity Research Buy 37.00 29.77
38.00
Siemens (EUR) 18/11/2019 08:36 Equity Research Buy 44.00 37.01
SNAM (EUR) 10/01/2020 08:27 Equity Research Hold 1700.00 40.83
12/02/2020 08:22 Equity Research Hold 1400.00 1133.00
1360.00 841.00
26/03/2020 08:05 Equity Research Buy 125.00 828.00
04/05/2020 07:34 Equity Research Buy 121.00 109.35
17/06/2020 09:05 Equity Research Hold 126.00 101.90
133.00 113.50
24/07/2020 06:53 Equity Research Hold 142.00 118.90
08/01/2020 08:55 Equity Research Buy 160.00 126.70
03/07/2020 08:28 Equity Research Buy 27.90 145.35
27.00 25.29
24/07/2020 08:26 Equity Research Buy 18.00 20.31
17/01/2020 08:10 Equity Research Buy 13.00 15.56
03/04/2020 07:17 Equity Research Buy 14.00 9.22
230.00 11.28
28/05/2020 07:05 Equity Research Buy 225.00 170.80
15/06/2020 07:51 Equity Research Buy 215.00 167.00
07/08/2020 07:19 Equity Research Buy 210.00 178.80
225.00 154.75
02/10/2020 07:39 Equity Research Buy 145.00 141.25
19/02/2020 09:23 Equity Research Buy 150.00 101.70
10/03/2020 08:03 Equity Research Buy 147.00 133.15
03/02/2020 08:16 Equity Research Buy 204.00 133.50
215.00 186.60
22/04/2020 07:04 Equity Research Buy 235.00 186.15
09/07/2020 07:08 Equity Research Buy 210.00 208.60
14/10/2019 07:30 Equity Research Buy 225.00 151.85
31.50 199.30
21/10/2019 07:34 Equity Research Buy 30.00 26.29
24/01/2020 08:07 Equity Research Buy 20.00 25.80
11/02/2020 09:33 Equity Research Buy 19.00 10.68
18.00
02/03/2020 08:15 Equity Research Buy 17.00 14.41
19/03/2020 08:11 Equity Research Buy 12.69
23/04/2020 07:08 Equity Research Buy 30.00 25.68
20.00 31.92
08/10/2020 08:31 Equity Research Hold 20.00 23.96
13/11/2019 08:08 Equity Research Buy 145.00 24.94
04/02/2020 08:12 Equity Research Buy 120.00 118.24
125.00 72.95
18/02/2020 09:17 Equity Research Buy 5.00 108.64
03/04/2020 07:13 Equity Research Buy 4.70 4.65
08/07/2020 08:27 Equity Research Buy 4.10

14/10/2019 07:22 Equity Research Buy
24/01/2020 08:11 Equity Research Buy
19/03/2020 08:13 Equity Research Buy

04/05/2020 07:37 Equity Research Buy
14/07/2020 07:05 Equity Research Buy
03/08/2020 08:26 Equity Research Buy

06/12/2019 09:38 Credit Research B20/H25
27/01/2020 08:20 Equity Research Hold
27/03/2020 08:08 Equity Research Hold

21/04/2020 06:57 Equity Research Reduce
18/12/2019 08:08 Equity Research Buy
30/03/2020 07:37 Equity Research Buy

30/09/2020 08:40 Equity Research Buy
05/11/2019 18:41 Equity Research Buy
20/03/2020 08:31 Equity Research Buy

keplercheuvreux.com 71

Chemicals

Thyssenkrupp (EUR) 22/07/2020 07:03 Equity Research Hold 4.70 4.75
Total (EUR) 15.00
11/10/2019 07:59 Equity Research Buy 14.00 12.47
25/02/2020 08:13 Equity Research Buy 7.50 9.57
06/04/2020 07:13 Equity Research Buy 4.28
4.00
12/05/2020 13:58 Equity Research Under Review 5.00 4.85
14/05/2020 08:17 Equity Research Hold 4.50 4.15
23/06/2020 07:22 Equity Research 59.00 6.46
Reduce 56.00
01/10/2020 07:13 Equity Research 41.00 4.31
14/10/2019 07:26 Equity Research Reduce 30.00 46.41
Equity Research Buy 33.00 47.32
Uniper (EUR) 24/01/2020 08:11 Buy 20.00
Equity Research 25.00 21.80
19/03/2020 08:15 Equity Research Buy 33.00 28.66
14/01/2020 08:32 Equity Research Hold 29.78
27/01/2020 08:20 Buy
Equity Research 26.74
02/03/2020 12:24 Equity Research Reduce 27.00
27/05/2020 07:28 Equity Research Hold 28.22
03/06/2020 07:20 Buy

Credit research does not issue target prices. Left intentionally blank.

Please refer to the following link https://research.keplercheuvreux.com/app/disclosure for a full list of investment recommendations issued over the last 12 months
by the author(s) and contributor(s) of this report on any financial instruments.

Equity research
Rating system

KEPLER CHEUVREUX equity research ratings and target prices are issued in absolute terms, not relative to any given benchmark. A rating on a stock is set after assessing the
twelve months expected upside or downside of the stock derived from the analyst’s fair value (target price) and in the light of the risk profile of the company. Ratings are defined
as follows:

Buy: The minimum expected upside is 10% over next 12 months (the minimum required upside could be higher in light of the company’s risk profile).

Hold: The expected upside is below 10% (the expected upside could be higher in light of the company’s risk profile).

Reduce: There is an expected downside.
Accept offer: In the context of a total or partial take-over bid, squeeze-out or similar share purchase proposals, the offer price is considered to be fairly valuing the shares.

Reject offer: In the context of a total or partial take-over bid, squeeze-out or similar share purchase proposals, the offered price is considered to be undervaluing the shares.

Under review: An event occurred with an expected significant impact on our target price and we cannot issue a recommendation before having processed that new information
and/or without a new share price reference.

Not rated: The stock is not covered.

Restricted: A recommendation, target price and/or financial forecast is not disclosed further to compliance and/or other regulatory considerations.

Due to share prices volatility, ratings and target prices may occasionally and temporarily be inconsistent with the above definition.

Valuation methodology and risks

Unless otherwise stated in this report, target prices and investment recommendations are determined based on fundamental research methodologies and relies on commonly
used valuation methodologies such as Discounted Cash Flow (DCF), valuation multiples comparison with history and peers, Dividend Discount Model (DDM).

Valuation methodologies and models can be highly dependent on macroeconomic factors (such as the price of commodities, exchange rates and interest rates) as well as other
external factors including taxation, regulation and geopolitical changes (such as tax policy changes, strikes or war). In addition, investors’ confidence and market sentiment can
affect the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on developments specific to individual
industries. Whichever valuation method is used there is a significant risk that the target price will not be achieved within the expected timeframe.

Unless otherwise stated, models used are proprietary. Additional information about the proprietary models used in this report is accessible on request.

KEPLER CHEUVREUX’ equity research policy is to update research rating when it deems appropriate in the light of new findings, markets development and any relevant
information that can impact the analyst’s view and opinion.

Regulators

Location Regulator Abbreviation
AMF
KEPLER CHEUVREUX S.A - France Autorité des Marchés Financiers
CNMV
KEPLER CHEUVREUX, Madrid branch Comisión Nacional del Mercado de Valores BaFin
CONSOB
KEPLER CHEUVREUX, Frankfurt branch Bundesanstalt für Finanzdienstleistungsaufsicht
AFM
KEPLER CHEUVREUX, Milan branch Commissione Nazionale per le Società e la Borsa FINMA
FINRA
KEPLER CHEUVREUX, Amsterdam branch Autoriteit Financiële Markten
FCA
KEPLER CHEUVREUX (Switzerland) SA, Zurich branch Swiss Financial Market Supervisory Authority FMA

KEPLER CAPITAL MARKETS, Inc. Financial Industry Regulatory Authority FI
NFSA
KEPLER CHEUVREUX, London branch Financial Conduct Authority FSMA

KEPLER CHEUVREUX, Vienna branch Austrian Financial Services Authority

KEPLER CHEUVREUX, Stockholm branch Finansinspektionen

KEPLER CHEUVREUX Oslo branch Finanstilsynet

KEPLER CHEUVREUX, Bruxelles branch Autorité des Services et Marchés Financiers

KEPLER CHEUVREUX is authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers.

keplercheuvreux.com 72

Chemicals

Legal and disclosure information

Other disclosures

This product is not for distribution to retail clients.

MIFID 2 WARNING: We remind you that pursuant to MiFID 2, it is your responsibility, as a recipient of this research document, to determine whether or not your firm is impacted
by the provisions of the Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (“MiFID 2”) regarding the
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The information contained in this publication was obtained from various publicly available sources believed to be reliable, but has not been independently verified by KEPLER
CHEUVREUX. KEPLER CHEUVREUX does not warrant the completeness or accuracy of such information and does not accept any liability with respect to the accuracy or
completeness of such information, except to the extent required by applicable law.

This publication is a brief summary and does not purport to contain all available information on the subjects covered. Further information may be available on request.

This publication is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an
invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction.

Any opinions, projections, forecasts or estimates in this report are those of the author only, who has acted with a high degree of expertise. They reflect only the current views of
the author at the date of this report and are subject to change without notice. KEPLER CHEUVREUX has no obligation to update, modify or amend this publication or to otherwise
notify a reader or recipient of this publication in the event that any matter, opinion, projection, forecast or estimate contained herein, changes or subsequently becomes
inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections, forecasts and estimates expressed in this report were in no way affected or
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The investments referred to in this publication may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own appropriate
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responsibility of the investor and KEPLER CHEUVREUX accepts no liability for any such loss or consequence. In the event of any doubt about any investment, recipients should
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Country and region disclosures

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keplercheuvreux.com 73

Chemicals

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keplercheuvreux.com 74

Chemicals Research Team Christian Faitz Patrick Roquas

Martin Roediger, CEFA [email protected] [email protected]
+49 69 756 96 147 +31 20 563 2366
Main author
[email protected] Andreas Bertheussen Peter Olofsen
+49 69 756 96 169
[email protected] [email protected]
Together with Christian Faitz, Martin heads +47 23 13 90 65 +31 20 563 2367
Kepler Cheuvreux‘s chemicals research.
Martin Rödiger joined Kepler Cheuvreux in Pablo Cuadrado
2004. He is a chemicals equity analyst with
23 years’ experience in the sector. He [email protected]
started his career at DZ Bank Frankfurt at +34 914 36 52 18
the end of 1996, and moved to CA
Cheuvreux’s Frankfurt office in 2004. He
covers German and European chemicals
stocks. Prior to that, Martin studied
Business Administration, specialising in
Finance and Accounting, at the University of
Applied Sciences in Frankfurt (Germany)
and at NHL University in Leeuwarden
(Netherlands). Martin graduated with a
Master’s degree in Business (Diplom-
Betriebswirt) from the University of Applied
Sciences in Frankfurt and has a CEFA
diploma. He has won 23 StarMine awards in
the chemical sector during his career.

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