WorleyParsons

There has been no changes to the WorleyParsons (WOR) earnings forecasts, valuation, DCF-based share price target or rating from stockmarket analyst Macquarie Research Equities.

WorleyParsons (WOR) Wins Russian Project

Sakhalin 1 Offshore Contract Win:

Worley’s 49% owned Russian associate Sakhneftegaz Engineering (SNE) has won the engineering, procurement and support services contract for the Exxon operated Sakhalin 1 Arkutan-Dagi offshore platform.

Modest Revenue Stream:

Here is an update on China’s Industrialisation from market analyst Macquarie Research Equities.

China’s Industrialisation: Resources Strong - Go Long!

26 May 2008
China’s Industrialisation: Resources Strong - Go Long!

Here is a strategy update on the Budget Impact on Equities provided by Australian market analyst UBS.

Strategy – Budget Impact on Equities

Worleyparsons Limited (WOR) has signed a letter of intent (LOI) with Chemaweyaat with initial revenues US$3m by Australian stockmarket analyst Macquarie Research Equities.

Worleyparsons Limited (WOR) Signs Letter of Intent for CIC

Small Initial Contract for CIC Abu Dhabi:

WOR has announced that it has signed a letter of intent (LOI) with Chemaweyaat for the Complex 1 Project in Chemicals Industrial City, Abu Dhabi. Initial revenues under the LOI are US$3m, and as such can be considered immaterial.

Project Could Become Major:

WorleyParsons (WOR) has a maintained share price target of $43.55 from Australian shares analyst Macquarie Research.

WorleyParsons (WOR): 'Wor' on Water

WorleyParsons (WOR) has an Outperform recommendation and a $32.57 share price target from Australian shares analyst Macquarie Research Equities. The company is expected to report FY07 results on 27th August. The analysts believe that continuing strong demand from the oil and gas industry combined with the investment boom taking place in the minerals industry makes this company extremely attractive in the current environment, and they expect a strong set of results on 27th August. Earnings growth set to continue: the analysts expect FY07 reported NPAT of $212.5m, up 52.8% on pcp of $139.1m. Earnings growth is expected to be driven by: 1) strong industry conditions in the oil and gas, power and the alumina industries; 2) upward pressure on engineering rates; and 3) increased staff numbers. Lazy balance sheet = more acquisitions: They estimate net debt/equity will only rise to 34.6% by the end of FY07 following the Colt acquisition and capital raising. FY08 EBITA interest cover looks strong at 14.6x. WorleyParsons announced four acquisitions in FY06 and four so far in FY07. Worley will continue to make acquisitions to fill geographic and skills gaps given its strong balance sheet. Big picture still in place: The analysts' key theme with Worley is that demand from the oil and gas industry is strong given high oil prices and the fact that the minerals industry is undergoing an investment boom benefiting WOR's minerals and metals business. The power sector outlook is also strong driven by both energy demands and environmental regulations. Environmental engineering will be a big new growth area: The environment remains a large opportunity for WorleyParsons with the company having the skills base to supply most sustainable and emissions-related technologies. This means engineering work to modify facilities, reduce energy consumption, reduce emissions etc. Worley is well placed to benefit from these emerging trends across all of its businesses. Worley also has a large nuclear power skill base if Australia changes policy. Catalyst: Excellent potential for further upgrades given strong core markets and lazy balance sheet combined with delivery of Parsons synergies and opportunities. The analysts' price target is based on Worley trading at a 10% premium to its international peer group. Worley is a quality business which generates consistent profit growth and free cashflow. While not cheap in the short term, MER see upside earnings risk given its strong core markets and a lazy balance sheet.

WorleyParsons (WOR) have a retained Hold share trading recommendation and an increased price target of $25.83 (from $22.01) from analyst Citigroup Investment Research (CIR). The analyst values WOR on an average of its peer group and DCF. WOR offers significant upside on the new TP but is likely to open higher when it resumes next Wednesday. WOR has announced the acquisition of the Colt (Engineering) group of companies based in Canada for A$1.1bn. This is a very positive acquisition for WOR, giving it a quality operating base in the high-growth Canadian oil sands market with a significant immediate EPS uplift. Colt is one of the leading oil sands engineering services firms. Development capex from identified projects in the region is expected to exceed C$120bn over the next 10 years. Colt has established relationships with the key operators and appears to have good visibility on workflow given the high-cost, multiyear nature of oil sands projects. While the acquisition multiple of 9.7x CY2006 EBITDA is not cheap the transaction is highly EPS accretive, as the multiple is a significant discount to WOR’s valuation and the deal will be partly funded by debt. CIR have increased their EPS forecasts by 7% in FY07E, 16% in FY08E and 15% in FY09E incorporating the acquisition and lower tax rate assumptions. WOR also released its 1H07A result with a reported NPAT of $94.5m, up 53% on the pcp. This was above its guidance range given last week and above their upgraded forecast. The difference from forecasts was in a low tax rate. CIR have reduced the tax rate forecasts. Their operational assumptions (excluding Colt) remain unchanged. Meanwhile, WOR have a retained Buy 2 share trading recommendation from analyst UBS and a target of $30.20 which approximates their midpoint of their valuation range.

WorleyParsons (WOR) shares have a retained Buy 2 shares Recommendation and a share price target of $25 from shares analyst UBS. The company have announced that first half profits for fiscal 2007 will be more than 15% higher on a sequential basis. This equates to 45% on a pcp basis. The group also noted that it expected further growth in the second half of fiscal 2007. UBS have forecasts were based on 10% sequential growth, hence we are increasing our 2007 forecasts by 10% and our 2008 forecasts by 3%. WOR has separately announced the purchase of SEA Engineering for US$25m. SEA is a Houston based design and engineering group specialising in floating offshore facilities. This is an area where WOR has historically been underrepresented. The purchase price represents 5x average EBIT. The analysts are increasing their valuation by around 5% to $25-26/share. Our share price target has been similarly increased.