We see the following as key risks to our rating and target price:
Strong FCF generation in the near-term is underpinned by the contractual nature of much of Air Liquide's business, which provides a high-quality earnings stream. Future sales growth is reasonably visible for the next three years, underpinned by newly installed capacity.
Potentially slower global industrial production might lead to slower-than-expected growth in the existing asset base. A change in legislation regarding energy transition, in particular in the US and Europe, as well as to the Chips Act, could have a negative impact on the portfolio of opportunities and investment backlog and, as a result, on the mid-term growth outlook. A non-delivery on the margin targets would also be a negative.
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