Stocks’ Details

WorleyParsons Limited

EPCM contract by Newmont Mining:WorleyParsons Limited (ASX: WOR), domiciled in Sydney, Australia, is an energy company providing a deep technical expertise across multiple projects and a wide range of consulting and advisory services. Recently, WOR was awarded an engineering, procurement, and construction management services contract (EPCM) by Newmont Mining Services Pty Ltd for providing EPCM services over Newmont’s underground mine operations in Tanami Desert for four years. The company also plans to complete the acquisition of Jacobs Engineering Group Inc. Energy, Chemical and Resource division (Jacobs ECR) in late March or April 2019.


Past 5-year performance (Source: Company Reports)

Over the past four years, the margins of the company have improved.It reported an EBITDA and Net margin of 7.3% and 3.3% respectively in FY18 as compared to 5.2% and -0.4% respectively in FY15. Similarly, the returns to shareholders have also improved as it was -2.6% in FY15 and 7.0% in FY18. It has a favourable capital structure with a Debt/Equity ratio of 0.45x. It reported a free cash flow of $0.22 billion in FY18 with a CAGR of 11.2% (FY15-FY18).

During the last one month, the stock hasgenerated a positive return of 24.43%. It is currently trading at $14.470 with a surge of 2.551% during the day. The Relative Strength Index along with the Bollinger bands are visible in negative territory. With the new EPCM contracts being awarded, synergistic acquisition of Jacobs ECR, improving margins and returns to shareholders, favourable capital structure and growing free cash flow we maintain our ‘Hold’ recommendation on the stock at the current market price of $14.470.

 

Orocobre Limited

Drilling update over Cauchari: Orocobre Limited (ASX: ORE) is an Australian based metal and mining company. It carried out a 30-day constant rate pumping test over the Cauchari JV property at a rate of 22 l/s with an average result of 650 mg/l Li and 4,970 mg/l K with Mg/Li of 2:2:1. It has also started the drilling of well for Stage 2 primary liming plant at the Olaroz and is expected to complete it by 3Q19.


Location of CAU07 production well (Source: Company Reports)

Over the past few years, the margins of the company have been fluctuating and are below the industry medians.It reported a lower operating and net margin of 11.0% each in FY18 as compared to the industry median of 19.8% and 12.8% respectively. However, the company enjoys a debt-free status with a current ratio of 42.57x.

During the last one month, the stock has generated a positive yield of 1.26% and is currently trading at a lower price level of $3.220. The Relative Strength Index is seen in a positive territory along with the price trading around the lower band of the Bollinger band. With the outstanding results over the Cauchari JV property, progress over the Olaroz Project, stock trading close to lower level, and a bullish indication through charts, we have a ‘buy’ position on the stock at the current market price of $3.220 (up by0.312% today).
 

Woodside Petroleum Limited

FY18 results to be declared on 14 Feb. 2019: Woodside Petroleum Limited (ASX: WPL), based in Perth, Australia, is engaged in the exploration and production of oil and gas. The company has completed the construction of Wheatstone LNG gas plant with first domestic gas production expected in 1Q19. It plans to award FEED contracts over the RSSD joint venture in early 2019. As per its 2019 production guidance, it is expected to produce 88-94 MMboe gas with a capex guidance of $1,600 million to $1,700 million. WPL will be declaring its FY18 results on 14 February 2019 at 07:30 am AWST.


FY19 investment expenditure guidance (Source: Company Reports)

Over the past few years, the margins of the company have improved and are reported above the industry median.It reported an EBITDA and Net margin of 71.4% and 24.8% respectively in 1H18 as compared to the industry median of 33.9% and 10.4% respectively. The company reported a higher than the industry dividend yield (TTM) of 5.3% as compared to the energy industry median of 2.8% showing that the company is generating more income for its shareholders.

Over the past 1 month, the stock has been in an uptrend and has generated a positive return of 11.12% and is trading slightly above the average of 52 weeks high and low level of $33.88 with reasonable PE multiple of 21.39x. With the upcoming FY18 results, better FY19 production guidance, new FEED contracts to be awarded, higher dividend yield and the uptrend seen through the chart, we maintain our ‘buy’ recommendation on the stock at the current market price of $34.100 (up 0.649% on 4 February 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)  
  

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