Woodside Petroleum Ltd

Notice About Annual General Meeting: Woodside Petroleum Ltd (ASX: WPL) had recently stated that its 2019 Annual General Meeting would be conducted on May 2, 2019. In sustainable development report for 2018, the company’s CEO had stated that the changes are ongoing with respect to energy markets as the world is trying to reduce emissions while extending access to modern energy. The company has also made an announcement that it received notice from Australasian Centre for Corporate Responsibility (or ACCR) which requests that the number of resolutions needs to be considered at WPL’s AGM. The resolutions are related to amendment to its constitution to enable advisory resolutions, a request that the Board make disclosures with regards to alignment with the Paris Climate Agreement and emissions targets, and a request to review WPL’s position, oversight and processes related to public policy advocacy on climate change and energy, including through industry associations.


FY18 Financial Headlines (Source: Company Reports)

The company’s net profit after tax (or NPAT) stood at $1,364 million in FY 2018 while the production stood at 91.4 MMboe and operating revenue amounted to $5,240 million. The company’s CEO had stated that WPL posted robust financial results, solid production as well as significant progress on the growth plans.

What to Expect From WPL: Woodside Petroleum had stated that, in FY 2019, it would be continuing active management of the debt portfolio. The company has reiterated its guidance and stated that the investment expenditure is expected to be between $1.6 billion to $1.7 billion in 2019 and production guidance for the year is expected to be between 88 to 94 million barrels of oil equivalent.

Stock Recommendation: The stock of Woodside Petroleum has delivered the return of 12.01% in the past three months, signifying a decent return over the short period. Also, the company managed to give strong distributions to the shareholders, and it is having a decent annual dividend yield of 5.74%. Also, the demand for LNG is expected to witness favourable momentum mainly because long-term buyers are returning. Hence, considering the decent annual dividend yield as compared to industry median of 3.1% and favourable outlook for LNG demand, we give a “Hold” recommendation on the stock at the current market price of A$34.430 per share (down 1.035% on 26 March 2019) as it is trading slightly towards 52-week high level.
 

New Hope Corporation Limited

Acquisition of Mitsui’s 10% interest in Bengalla Joint Venture: Recently, New Hope Corporation Limited (ASX: NHC) has made an announcement that the acquisition of Mitsui’s 10% interest in Bengalla Joint Venture has been completed. As a result, New Hope now holds an 80% interest in the Joint Venture and Taipower is holding 20%. The economic effective date for the transaction is 1 December 2018.NHC’s net profit after tax before non-regular items amounted to $159.8 million in 1H FY 2019. The company’s total revenue amounted to $616.7 million implying a 21% rise on the PCP.

Profit Before Tax and Non-regular Items (Source: Company Reports)

New Hope Corporation’s current ratio stood at 1.26x 1H FY 2019 which is, more or less, in line with the industry median of 1.24x. Therefore, it can be said that NWC is in a decent position to meet its short-term obligations. In 1H FY 2019, the company’s RoE stood at 6.2% which reflects a YoY rise of 4.4% demonstrating that NHC has delivered decent returns to the shareholders.

What to Expect From NHC: There are expectations that New Hope Corporation would continue the careful cost management moving forward as improving commodity prices start to impact across the industry on the cost of labour and materials. The company is focusing towards safe and efficient production at the existing operations, start of mining operations at Lenton Joint Venture Burton Mine as well as extending the life of operations at New Acland.

Stock Recommendation: Over the past one year, the stock of New Hope Corporation Limited had delivered 47.73% return which can be considered a good return over the same period. The company’s annual dividend yield stood at 5.28%. Also, New Hope Corporation announced the acquisition of Mitsui’s 10% interest in Bengalla Joint Venture and, as a result, it is now holding 80% interest in the joint venture which might support the company moving forward.

Despite a mixed half year result, the investors have been concerned about uncertainties in energy and coal mining space, which in turn impacted NHC's stock performance lately. On the backdrop of above factors, we believe that this stock should be watched for any specific catalysts while it trades at a relatively lower level of A$3.090 per share (up 1.98% on 26 March 2019). 
 

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