Worley Parsons (WOR) News

Submitted by Jim Thesiger on 10 June, 2008 - 13:17

Worley Parsons (WOR) has a 12-month price target of $39.42 from stockmarket analyst Macquarie Research Equities.

Worley Parsons (WOR) – Opportunities a Plenty

Worley Parsons (WOR) remains an Australian stalwart in the Energy and Resource sector, providing specialist services across Oil & Gas, Industrial Infrastructure, Minerals Metals & Chemicals and Power & Water. The company has acquired Canadian-based firm Westmar Consultants for c$47.5m which is due to settle by 30 June. Macquarie Research Equities (MRE) analyses the deal and the benefits for WOR moving forward…

The Acquisition

WOR will leverage off the key markets underpinning Westmar’s business, such as:

  • Marine & Ports;
  • Resource Infrastructure;
  • Bulk Materials Handling;
  • Transport;

Key clients include BHP, RIO and Western Canadian Coal.

A Lazy Balance Sheet could mean more Acquisitions

With a net debt to equity ratio circa 38.3% and EBITA interest cover at 13x, MRE believe that WOR still has plenty of cash to pursue further acquisitions.

Opportunities for WOR

WOR’s minerals and metals business has leveraged off the back of strong oil prices and the minerals boom. Furthermore, the environment remains a sound opportunity for WOR with the company maintaining a skill base to supply sustainable and emissions-related technology. It’s also interesting to note that if Australia ever changes its nuclear power policy, the company maintains a respectably nuclear power skills base.

Recommendation

MRE have a 12-month price target of $39.42. MRE believe there is the potential for further upgrades given strong core markets and a lazy balance sheet. Further acquisitions could potentially fill geographic and skills gaps. The MRE price target is essentially at a 10% premium to its international competitors.

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