WorleyParsons Limited (WOR)
Views and News
Has been one of our favourite stocks
Up to early 2012 we had a 'core stock' rating, but the changed global environment has depressed prospects even for leaders in the oil & gas sector creating its development and expansion. We therefore dropped WOR and lowered it to 'Potent' classification. Nevertheless, it justifies careful watching for signs of recovery in its prospects and its potential return to favour.
We wrote in 2012 that ... Our core rating had been well justified by WorleyParson's record, its financial and operational strength and its holding one of the leading positions in global resource project work, particularly in the energy field. The P/E is not historically high and we recommend WOR as a Buy or at least Accumulate depending on your portfolio sector balance. Even though dividends are only partly franked, the price correction has given rise to a reasonable yield previously not expected!
The strong run of contract awards noted below add confidence that WOR continues to be strongly regarded in its field and that uncertainties over Europe and potential slowing of trade/resource/investment activity are not currently overly hindering projects in the hydrocarbons area. The oil price remains at a comfortably high level, not excessive for growth recovery, and not indicating excessive concern over geopolitical disruption to supplies. Some 75% or more of WOR's business is in hydrocarbons and over 20% lies in Asia.
WorleyParsons continues to exhibit the characteristics we seek of a core stock.
While we do not expect the 1H12 result to be much out of line with estimates, we assume reasonably confident guidance on February 22.
Half-year Performance & Estimates - WOR
| Year-end June | 1H12A | FY12A | 1H13A | FY13A | 1H14A | FY14E | FY15E |
|---|---|---|---|---|---|---|---|
| Sales, $m | 3,294 | 7,390 | 4,396 | 8,811 | 4,806 | 7,637 | 7,763 |
| EBITDA, $m | 298.2 | 633.4 | 302.5 | 629.4 | 243.8 | 550.7 | 610.9 |
| EBIT, $m | 248.4 | 530.4 | 252.0 | 527.1 | 189.6 | 447.1 | 500.2 |
| Report NPAT, $m | 164.5 | 369.0 | 166.0 | 344.3 | 119.8 | ||
| Adj. NPAT, $m | 119.8 | 270.6 | 311.5 | ||||
| Reported EPS, ¢ | 61.00 | 139.00 | 63.00 | 130.00 | 45.00 | ||
| Adjusted EPS, ¢ | 45.00 | 110.00 | 127.00 | ||||
| EPS %FY/Growth | 44% | 48% | -6% | -29% | -15% | 15% | |
| Dividend, ¢ | 40.0 | 91.0 | 41.5 | 92.5 | 34.0 | 79.00 | 90.00 |
| Franking, % | 79% | 69% | 100% | 45% | 25% | 45% | 45% |
| EBITDA Margin | 0 | 9% | 7% | 7% | 5% | 7.2% | 7.9% |
| NPAT Margin | 0 | 5% | 4% | 4% | 2% | 3.5% | 4.0% |
| ROE, % | 0 | 18% | 8% | 15% | 5% | ||
| EBIT/Interest | 0.0 | 12.0 | 10.5 | 9.9 | 6.02 | ||
| Net Debt / Equity | 0 | 0.25 | 0.25 | 0.34 | 0.32 | ||
| CashFlow/Sh, ¢ | 26.0 | 178.0 | 50.7 | 180.1 | 93.1 | 159.9 | 177.5 |
| Y/E Shares, m | 245.8 | 245.8 | 246.5 | 246.5 | 246.5 |
| Notes |
| Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns except the first half years which show their percentage of full year EPS. In a handful of cases, unadjusted share splits, or changes between positive and negative values, may give strange changes in ratios. |
Recent News Highlights
Wave Chart
Company Overview
WorleyParsons Limited (WOR) is a leading global provider of professional services to the energy, resource and complex process industries. WOR offers a full range of services from feasibility studies, design, project services and plant upgrades to maintenance.
With key strengths in hydrocarbons, WOR covers all power sources, including power production & infrastructure. It uses an alliance based approach for a significant proportion of the company’s contracts. With proven global work-sharing execution, WOR has some 30,000 people working in 37 countries.
Business is by no means reliant on new projects; ongoing expansions and upgrades are typical, while WOR makes a feature of its increasingly used 'Improve' approach, which as its name suggests seeks to enhance all aspects of efficiency, safety, output, cost and performance of a client's operations.
Profile
WorleyParsons
Rating: ♦
Category: Potent Stock ; Large
Action:
Website: www.worleyparsons.com
| ASX code: | WOR |
| Closing Price, 20/06/14: | $ 17.210 |
| Market Capitalisation: | $ 4,190 million |
| 52 Week High: | $ 24.54 |
| 52 Week Low: | $ 14.72 |
| Sector: | Oil & Gas Equipment & Services |
| Index: | S&P/ASX 50 Index |
Summary of Fundamentals
| Year-end June | FY12A | FY13A | FY14E | FY15E |
|---|---|---|---|---|
| NPAT, $m | 369.0 | 344.3 | 270.6 | 311.5 |
| Reported EPS, ¢ | 139.00 | 130.00 | ||
| Adjusted EPS, ¢ | 322.10 | 110.00 | 127.00 | |
| EPS Growth, % | 15% | 132% | -66% | 15% |
| P/E Ratio, x | 12.38 | 5.34 | 15.65 | 13.55 |
| Dividend, ¢ | 91.0 | 92.5 | 79.00 | 90.00 |
| Franking, % | 69% | 45% | 45% | 45% |
| Div. Yield, % | 5.29 | 5.37 | 4.59 | 5.23 |
Notes
| Our Adjusted EPS is used for the last year and forward estimates and as basis for EPS Growth and P/E Ratio. We currently use Reported data for all historic NPAT, for the prior year EPS and as base for last year EPS growth. |
| Data & Chart sourced from IRESS Market Technology Ltd. |
One Year Chart
As at 23 June 2014
Other Highlights
| Sector: | Oil & Gas Equipment & Services |
| Return on Equity, FY13 : | 15% |
| Net Debt to Equity, FY13 : | 34 % |
| EBIT / Interest Cover, FY13 : | 9.87 x |
| Gicscode: | 10101020 |
| First Listed: | 28-Nov-02 |
Business Activities
WorleyParsons Limited (WOR) provides feasibility, design, instal, improve and maintain project services to the oil & gas, power, minerals & metals, infrastructure & environment sectors worldwide.
Glossary:
| ♠ | "A Core Stock" - reliable long-term yield & growth |
| ♥ | "We like it" - a seasoned performer, growth & yield |
| ♦ | "A tough scout" - creating a potential breakthrough |
| ♣ | "A steady performer" - giving reliable yield or growth |
| Best Stocks | Portfolio of selected attractive investments |
| Potential | Stocks that may have good improvement prospects |
| Speculative | More risky usually smaller stocks with spec. upside |
| Midcaps | In RR Midcap Index, $ 70m to 1,500m market cap. |
| Large Stocks | Larger Stocks upwards of $ 1,500m market cap |
---[-2-b]---