Woodside Petroleum Limited
Decent Q4FY18 Performance: Woodside Petroleum Limited (ASX: WPL) is a large-cap independent gas and oil company with the market capitalization of around $32.39 Bn as of 13 February 2019. Since 1989, the group has delivered more than 5,000 LNG cargoes to its customers across the globe. Recently, the group reported fourth quarter report for the period ended 31 December 2018 wherein it delivered decent quarter-on-quarter production of 24.1 MMboe and sales revenue of $ 1,419 Mn, showing pleasant rise of 10% and 43%, respectively as compared to Q4FY17. The sales revenue was primarily driven by the higher realised prices and strong production incurred during the same period. Additionally, for FY19, the company expects the production to be in the range of 88 – 94 MMboe. Moreover, the group is expecting to continue to exceed its expectations with production from Wheatstone LNG Train 1 and Train 2. On the analysis front, gross margin stood at 49.9% in 1HFY18, which is largely in line with the industry median of 51.1%. The annual dividend yield of the company is 3.91%. Valuation-wise WPL looks impressive with Net Margin of 24.8% in 1HFY18 compared to the industry median of 10.4%. ROE and ROIC as at June 2018 stood at 3.4% and 2.5%, respectively, against values as at December 2017 of 3.4% and 2.4%, respectively. The Quick ratio improved from 0.79x to 1.53x and current ratio also improved from 0.97x to 1.70x in the six months as at 30 June 2018, representing decent liquidity position of the firm.
Q4 FY18 Sales Revenue Summary (Source: Company Reports)
Meanwhile, the stock was up by 4.59 per cent in the past one month as at February 12, 2019 and is trading reasonable PE multiple of 21.84x. Based on decent fundamentals and entered into a long-term gas purchase and sale agreement with Perdaman for the supply of pipeline gas over 20 years which might act catalyst for the company over the period, we, therefore, maintain our “Buy” recommendation on the stock at the current market price of $34.86 (up 0.751% on 13 February 2019).
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