WorleyParsons Ltd

WOR Details
· Weak bottom-line in 1H 2017 dragged the stock lower: WorleyParsons Ltd (ASX: WOR) stock fell over 12.78% on February 20, 2017 after the company reported weak first half 2017 results. WOR has reported for 22.7% fall in the underlying net profit after tax (NPAT) of $57.1 million in the 1H 2017 against the prior corresponding period and the statutory net loss after tax of $2.4 million, impacted by significant restructuring charges. The aggregated revenue declined 30.3% to $2,165.7 million, in line with overall market contraction in 1H 2017. However, WOR has further increased the overhead reduction target to a total of $450 million in annualized savings by the end of financial year 2017 on an exit run rate basis, as compared to the original target of $300 million outlined in February 2016.

· Recommendation: WOR has delivered $220m in annualized overhead savings in the half 2017. Moreover, WOR’s backlog has increased to $4.7 billion in 1H 2017 from $4.2 billion in June 2016. During the 1H 2017, WOR has secured 48 significant awards with a total contract value in excess of $1.3 billion. WOR stock rose over 13.46% (as of February 17, 2017) in the last three months. Considering the result update and WOR’s progress on cost-reduction target, we give a “Hold” recommendation at the current price of – $ 8.60
 

1H 17 Financial Performance (Source: Company Reports) 

Brambles Ltd

BXB Details
· Statutory operating profit down in 1H 2017: Brambles Ltd (ASX: BXB) stock fell over 9.89% on February 20, 2017 as BXB reported for a 26% fall in the 1H 2017 statutory operating profit at constant currency, due to the significant items of US$138.5 million. This included a US$120 million non-cash impairment of the group’s investment in the Hoover Ferguson Group (HFG) joint venture. Excluding the impact of the HFG impairment, the operating profit has increased 1%. Moreover, the sales revenue grew 5% at constant currency, due to the solid growth with new and existing customers in Pallets Europe and Pallets Latin America, continued expansion in RPCs and Containers, and modest growth in Pallets North America. The Underlying Profit grew 3% on a constant currency basis, due to the strong profit growth in both RPCs and Containers, with an impact of the profit decline in Pallets North America. The Pallets North America performance was impacted by the lower sales revenue growth and direct cost challenges. Additionally, BXB has revised the FY17 guidance at constant-currency. The sales revenue growth is expected to be in line with 1H17, the Underlying Profit is expected to be flat over FY16, and the FY17 growth capex is expected to be approximately US$350 million. The company has withdrawn the FY 19 targets.

· Recommendation: BXB stock fell over 20.80% in the last six months (as of February 17, 2017), and still trading at slightly high levels. We give an “Expensive” recommendation at the current price of – $ 9.47

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