Celanese Inks Strategic Cooperation Deal With Oriental Yuhong

Celanese Corporation CE recently announced that it has inked a comprehensive strategic cooperation and development agreement with Beijing Oriental Yuhong Waterproof Technology Co., Ltd. The deal is aimed at expanding cooperation in terms of expansion in emerging markets, product R&D as well as the advancement of industry, safety and sustainability.

One of the major aspects of the agreement is exchange of information and practices in usage of emulsions for waterproofing applications. Moreover, the companies are likely to assess where Celanese can develop new product applications for usage in Oriental Yuhong’s waterproofing unit.

The companies are likely to share product development information as well as discuss plant productivity and sustainability. These activities will enable the companies to identify opportunities for improving production, boosting cost savings and achieving operational sustainability. They are also expected to evaluate and identify new supply arrangements in the Asia-Pacific region.

Notably, the companies have been commercially working together for more than a decade in the area of emulsions as well as vinyl acetate chemistry. The latest strategic agreement will help advance sustainable development of the waterproofing and emulsions industry with chemistry solutions. Specific terms of the deal were not disclosed by the companies.

Celanese’s shares have gained 40.8% year to date compared with the industry’s 19.2% rise.

Celanese’s adjusted earnings declined 15.5% year over year to $2.53 per share in third-quarter 2019. Nevertheless, the figure topped the Zacks Consensus Estimate of $2.50.

Revenues of $1,586 million fell roughly 10% year over year and lagged the Zacks Consensus Estimate of $1,624 million. The chemical maker witnessed persistent demand weakness during the third quarter.

Celanese lowered its adjusted earnings per share guidance for 2019, factoring in expectations that market conditions are not likely to improve this year. The company now sees adjusted earnings in the band of $9.60-$9.80 per share compared with its prior view of nearly $10.50. The company expects demand weakness to continue through 2019.

Zacks Rank & Stocks to Consider

Celanese currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd IMPUY, Franco-Nevada Corporation FNV and Agnico Eagle Mines Limited AEM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 248.3% for the current fiscal year. The company’s shares have surged 243% in the past year.

Franco-Nevada has projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 51.2% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 72.2% in the past year.

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