Leader Of The Pack – Linde Outperformance Since 1995 Is More About Discipline Than Luck

Companies Mentioned: Linde, Air Products, Air Liquide, Glencore, Cabot Corp, FMC, DuPont, Chevron, Deepak Fertilizers & Petrochemicals, Grupa Azoty, Heubach, KMG, Midas Minerals, Nippon Sanso, Occidental, BP, Williams, Permian Resources, Tellurian, Hess Midstream, Lukoil, Adani, QatarEnergy, Petronet, MPLX, Borealis, ExxonMobil, Brookfield, TotalEnergies, Plug Power, NextChem, Engie, Spearment Energy, Vattenfall, Eni, Hertz, Polestar, Toyota, Warrior Met Coal, Electriq Partners
Commodities Mentioned: Chlorine, Carbon Black, Polypropylene, Polyethylene, Benzene, Propylene, MEG, MEK, Oil, Natural Gas, Naphtha, Hydrogen, Ammonia, Carbon, R-PE

Key Findings

General Thoughts: While many companies rapidly expanded energy transition efforts amid surging expectations in 2022/23, Linde took a more patient and balanced approach that has served its shareholders well over time.
Supply Chain/Commodities: We compare Linde and Air Products’ 4Q results and 2024 outlooks. We also discuss lingering issues with inventory destocking and demand across many product chains, as noted by FMC and DuPont.
Energy/Upstream: We discuss BP 4Q23 results and the investor appetite for hybrid oil and gas/energy transition stories, and we highlight Ex-US naphtha price weakness relative to USGC ethane, favoring chemical production.
Sustainability/Energy Transition: Linde shares our skeptical view towards the rapid build-out of economical green hydrogen amid high costs, the lack of premium prices to spur returns, and more cost-advantaged blue production.
Downstream/Other Chemicals: We highlight an article discussing weak China export prices as a concern, an item we have noted regularly, as the China export support is due to higher volume more than offsetting lower prices.

Exhibit 1: Linde equity has significantly outperformed peer industrial gas companies and the S&P 500 since 1995.