WorleyParsons Limited

 

 WOR Details
 
FY19 Results Highlights:WorleyParsons Limited (ASX: WOR) provides engineering design and project delivery services which includes providing maintenance, reliability support services and advisory services to energy, chemicals and resources sectors. The market capitalisation of the company stood at ~A$7.35 billion as on 18^th September 2019.

The company reported an aggregate revenue of $6.4 billion up by 35.6% due to improved market conditions and the inclusion of ECR business from late April 2019.Underlying EBITA was up by 32% to $412.8 million. The company continues to grow through a combination of their focus on the energy, chemicals and resources sectors, cost control delivering operating leverage and improved market conditions. In addition to the contribution from the ECR, the company’s aggregate revenue has now increased for the fifth consecutive six-month period. The company has announced to pay a final dividend of 15 cents per share, unfranked for the year, which will make the total dividend for the year to 27.5 cents per share.


Five Year Performance at glance (Source: Company Reports)

Sectoral Performance:

(a) Energy- The Energy sector, which comprises of upstream and midstream hydrocarbons as well as power, reported aggregated revenue of $4,480.1 million and segment result of $437.1 million with a margin of 9.8% in FY19. Energy contributed 70% to the Group’s aggregated revenue, decreasing from last year as the increased exposure from Chemicals and Resources flows through from ECR.

(b) Chemicals- The Chemical sector, which comprises of downstream hydrocarbons, petrochemicals and chemicals, reported aggregated revenue of $1,326.6 million and segment result of $94.3 million with a margin of 7.1%.

(c) Resources- The Resources sector, comprising mining, minerals and metals as well as infrastructure, reported aggregated revenue of $632.4 million and segment result of $45.1 million with a margin of 7.1%. The contribution from resources’ sector to aggregated revenue increased to 10%.

 
FY19 Revenue Split (Source: Company Reports)

Outlook for FY20: The energy, chemicals and resources market indicators and growth in backlog provide evidence of continued improvement in market conditions.However, market is being tempered by macroeconomic global uncertainty. As a result of ECR acquisition, the company has enhanced the diversity and resilience of its earnings. In FY20, the company expects to deliver the benefits of the acquisition of ECR, including the realization of cost, margin and revenue synergies.

Reliance Awards Worley a PMC Service Contract:INTECSEA Inc, a wholly owned subsidiary of Worley, has been awarded a project management consultancy (PMC) contract by Reliance Industries Limited for the MJ Field deep-water gas and condensate project.Under this contract, INTECSEA Inc will provide PMC services for the development of Reliance’s subsea gas and condensate resource located in deep water of approx. 1,000 meters in the MJ Field offshore of India.

Stock Performance:On the stock’s performance front, it produced returns of 2.83% and 3.81% in the last one month and three months, respectively. Currently, the stock is trading below the average of 52 weeks high and low levels of $19.734 and $10.720, respectively, indicating a decent opportunity for accumulation. Hence, in view of aforesaid parameters, decent financials and current trading levels, we give a “Buy” recommendation on the stock at the current market price of A$13.580 per share (down 4.164% on 18^th September 2019).

 
WOR Daily Technical Chart (Source: Thomson Reuters)

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