Here’s a tight, battle-tested playbook for the industrial gases space—what to invest in for maximum leverage & compounding returns, plus a ready-to-use ROCE model (2025–2030).

1) Key assets that compound (and why)

A. On-site production units (ASU / HYCO / small on-sites)
Build-Own-Operate contracts (10–15+ years), typically with take-or-pay and energy cost pass-through → high visibility, steady cash flows, and rapid backlog-to-cash conversion. Recent disclosures emphasize 10–15-year terms and pass-through mechanics. Air Liquide+1

B. Pipeline clusters around anchor customers
Incremental connections monetize sunk capacity, raise utilization, and create durable barriers to entry in regional “basins.” SEC

C. Merchant logistics & telemetry (bulk tanks, VIEs, routing, smart meters)
Telemetry + route optimization reduces km/ton, boosts drops per day, and lifts EBITDA/ton; capex is modular and scales across sites. (Generalizable ops best practice; pair with A/B.) [Operational claim—no single source required.]

D. Specialty & Electronics gases capacity (UHP lines, small on-sites for fabs)
High value-add, sticky specs, and multi-year supply wins (record new small on-site agreements across 2024–2025). linde-engineering.comAir Liquide

E. CO₂ capture & liquefaction modules (food/beverage, EOR-free)
Monetizes stranded/biogenic CO₂, hedges against CO₂ scarcity cycles, and rides decarbonization incentives. (Company programs often fold into “energy transition” backlogs.) Air Liquideusa.airliquide.com

F. Green H₂ supply chains (PEM + PPA + offtake)
Structure via long-term take-or-pay offtakes to keep ROCE predictable as volumes scale. airproducts.com

G. Digital reliability stack (predictive maintenance, energy optimization)
Retrofits on existing ASUs/HYCOs lift uptime and specific power efficiency—expanding margin without proportional capital. [Operational claim—no single source required.]

H. Customer-side assets with rental economics (smart cylinders, micro-bulk, homecare oxygen)
Recurring rental + service fees compound and improve asset turns (particularly in healthcare and light-industry segments). Reuters

I. JV/Project finance structures
Preserve balance sheet capacity for high-IRR “repeatables” while keeping CE growth below EBIT growth (key to ROCE climb). (Widely used in large on-site & transition projects.) assets.linde.com

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2) ROCE: definition & levers

Formula (finance-grade):
ROCE = EBIT / Capital Employed, where Capital Employed = Net Operating Assets (working capital + net PP&E + ROU assets – non-interest current liabilities). Many peers also quote >10% ROCE targets under 2025 plans. Reuters

How to raise ROCE fast (industrial gases-specific):

• Margin levers (↑EBIT): on-site mix ↑; pipeline utilization ↑; energy pass-through discipline; price/mix in merchant & specialties; telemetry-driven logistics savings. Air Liquide+1
• Capital levers (↓CE / ↑turns): JV/BOO structures; modular small on-sites; retrofit vs greenfield where possible; densify around existing pipelines.

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3) Sample ROCE path (2025→2030)

Illustrative portfolio model (EUR, millions):

Year	Sales	EBIT margin	EBIT	CE	ROCE
2025	400	12.0%	48.0	400.0	12.0%
2026	424	12.8%	54.3	412.0	13.2%
2027	449	13.6%	61.1	424.4	14.4%
2028	476	14.4%	68.6	437.1	15.7%
2029	505	15.2%	76.8	450.2	17.1%
2030	535	16.0%	85.6	463.7	18.5%

Assumptions: sales +6% CAGR (on-site & specialties backlog); margin +80 bps every year via mix/utilization/ops; CE +3% CAGR using JV/asset-light structures. (Adjust to your pipeline for a >20% high case.)

5) 2025–2030 investment sequence (high-leverage first)

1. Densify existing basins (pipeline hookups; telemetry; price/mix in merchant). SEC
2. Convert anchor demand to on-site BOO (10–15+ yrs, take-or-pay, pass-through). Air Liquide+1
3. Add small on-sites for electronics & high-purity (record signings trend). linde-engineering.comAir Liquide
4. Layer CO₂ capture & green H₂ with contracted offtake (transition growth, de-risked). Air Liquideairproducts.com
5. Use JV/project finance to cap CE growth while scaling EBIT. assets.linde

📘 Glossary of Key Short Forms (Industrial Gas)

ASU – Air Separation Unit
Large-scale plant that separates atmospheric air into oxygen, nitrogen, and argon, the backbone of on-site and pipeline supply.

BOO – Build-Own-Operate
A contract model where the gas company builds, owns, and operates the plant, usually under long-term take-or-pay agreements.

CAPEX – Capital Expenditure
Funds used to acquire, upgrade, and maintain physical assets such as plants, pipelines, or cylinders.

CE – Capital Employed
The total net operating assets invested in the business (PP&E, working capital, etc.), used in the denominator of ROCE.

EBIT – Earnings Before Interest and Taxes
Operating profit that reflects the profitability of the business before financing and taxes.

EOR – Enhanced Oil Recovery
A method of extracting additional crude oil from reservoirs using injected gases like CO₂.

HYCO – Hydrogen/Carbon Monoxide Plant
A production unit supplying syngas (H₂, CO, mixtures) to refineries and chemical customers.

IRR – Internal Rate of Return
Discount rate at which the net present value (NPV) of a project equals zero; used for project investment evaluation.

JV – Joint Venture
A corporate structure in which two or more parties share ownership, risk, and return in a project.

LNG – Liquefied Natural Gas
Natural gas that has been cooled to liquid form for easier storage or transport; sometimes relevant for hydrogen transition.

PP&E – Property, Plant & Equipment
Tangible fixed assets recorded on the balance sheet, forming the backbone of capital employed.

PPA – Power Purchase Agreement
A long-term contract to buy renewable electricity, often paired with green hydrogen electrolysis projects.

ROCE – Return on Capital Employed
Financial ratio: EBIT ÷ Capital Employed; a key measure of capital efficiency in industrial gases.

ROU Asset – Right-of-Use Asset
An accounting asset that reflects the right to use leased equipment, vehicles, or facilities (IFRS 16 standard).

UHP – Ultra-High Purity
Refers to gases (nitrogen, oxygen, hydrogen, etc.) purified to very low contamination levels, essential for electronics and semiconductors.

VIE – Vacuum-Insulated Evaporator
A cryogenic storage tank used for bulk liquid gases at customer sites, providing safety and efficiency.