WorleyParsons Limited (ASX: WOR)

Expanding contract pipeline: WorleyParsons Ltd (ASX: WOR) has now secured a fabrication and construction contract by Tidewater midstream and Infrastructure Ltd for its Pipestone sour gas plant in Canada on November 2, 2018. Under this contract, WorleyParsonsCord will provide fabrication and construction services for the Pipestone Sour Gas Plant. SABIC also awarded a framework agreement to WOR for EPCM services.

Strong Operating and financial Performance: WOR reported 8.55% rise in the aggregated revenue up to $4749.2 million in FY2018. Underlying net profit after tax reported the highest levels in five years in FY2018 with a rise of 39.1% up to $171.4 million. WOR delivered strong cash flow figures of $259.7 million in FY2018 as compared to $78.9 million in FY2017.

Global footprints with leading market positions in almost all the sectors and diversified capabilities places company with a stronger base to serve the customers efficiently and effectively.The performance numbers demonstrate a strong operating leverage as a result of sustained cost reductions.  WorleyParsons operational and financial metrics are all sound and heading in the right direction.

Technically, the scrip is in downtrend from the month of September and currently trading at the middle of Bollinger bands. Relative strength index (RSI) and Moving average convergence and divergence (MACD) indicators consolidating in the positive territory indicate for scrip taking some support and showing trend reversal. At current juncture scrip looks good to hold and watch for any reversal on the charts. The market cap of WOR was recorded at $5.54 bn, with P/E of 61.03x as on November 5. At current juncture scrip is trading at the price levels of $14.04. Strong operating and financial metrics with geographical presence, and trading at middle band of the bollinger bands as per technical charts, exhibits a “Hold” scenario at the current levels. We maintain a “Hold” recommendation on the scrip at the current price levels of $14.04 and expect momentum in the near future given the contract base.

Alumina Limited (ASX: AWC)

Performance for Alcoa: Alumina Limited (ASX: AWC) recently posted the third quarter earnings update on its Alcoa Corp (40% holding). Adjusted EBITDA under Alcoa Bauxite segment posted a significant rise driven by favorable currency and price movements. Adjusted EBITDA under the Alcoa Alumina segment posted about 3% rise.

Improved Market Conditions enhanced the distributions: For the half year 2018, structural and environmental reforms in China along with tight western world alumina market impacted the company and the effect was seen on the average realized alumina price recording with 35% rise on the previous corresponding period. Production cost rose significantly. Second half of 2018 has noticed strong distributions which helped the company is delivering an interim dividend of 105% higher than last year. 77% rise in the (EBITDA) earnings before interest, tax, depreciation and amortization up to US$1208 million was posted during the half year period ended on June 30, 2018 as compared to US$682.4 million for the corresponding period ended on June 30, 2017. Net cash inflows posted 42% rise to US $660.5 million for the half year period ended on June 30, 2018 as compared to US$463.6 million reported as at June 30, 2017.

Margin for alumina refineries posted an increment by $87 per tonne to US$200 per tonne. AWC reported   net profit of US$737 million for the half year period ended on June 30, 2018 as compared to net profit of US$367 million for the corresponding period ended on June 30, 2017. The rise in the net profit was backed by increase in the shipments rate during 1H2018 and higher realized alumina prices which has offset the higher charges for the input cost, varied operational issues and other significant charge.
Technically, the scrip is in downtrend with reversal candle formed back to back in the month of September and October. The scrip is currently trading above the middle bollinger bands. Relative strength index (RSI) and Moving average convergence and divergence (MACD) indicator consolidating in the positive territory indicate that at the current juncture, the scrip might take a support and show trend reversal

The market cap of AWC was recorded at $7.34bn, with P/E of 11.38x as on November 5. At current juncture, scrip is trading at the price levels of $2.51. Strong distributions with improved margins, and trading at middle band of the bollinger bands  as per technical charts, exhibit a “Hold” scenario at the current levels. We maintain a “Hold” recommendation on the scrip at the current price levels of $2.51.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.