hy13 results this week?

EHL will likely release its half year 2013 results this week. There are several variables at play, which explains why analyst predictions range quite a bit. Interesting that while analysts slashed target prices in November, all 13 of them rate EHL as either hold or buy, possibly because some note EHL is oversold at current or recent share prices.

EHL's last guidance (in Nov12) predicted $23m-$26m NPAT for this half. It has good cash flow, important for dividends but almost certainly reduced from HY12. My guess is 1.5c to 2c dividend for HY13 (and possibly 2c to 3c for 2nd half).

The key question is EHL's current and prospective business activity across the regions. Recall that improved business in Chile, Canada, and Indonesia offset most (but not all) of the downfall in OZ. The OZ drop was due to nonrenewal of coal contracts, a couple of cancelled gold contracts, and competitive pressures across the OZ business. Lower ore prices were blamed for the catastrophe.

I suspect that OZ coal is still a drag, but maybe some equipment was relocated overseas. Possibly an uptick in contracts with OZ iron ore and gold again, but tight margins and unlikely to begin until 2nd half. Indonesia is likely OK but uncertainty due to heavy coal emphasis and maybe gov't export restriction plans.

The saviours are likely Chile and Canada. Chile likely is growing nicely (and beyond copper to gold mines), but still a small base. Canada might also pull up NPAT due to higher utilization and increased fleet this year. Utilization rose from 74% in Aug12 to 86% in Nov12, and the Cdn winter is busiest for the oil sands. The Nov12 release said: "Utilisation, which is currently at 86%, is expected to increase further over the next month with high activity levels expected throughout the winter period in the oil sands."

EHL says it is reducing costs, particularly in OZ, in various ways. But the main cost reduction will be lower sustaining capex (to $80m from $120m). No need to replace equipment that has been idle! To put this in perspective, EHL's NPAT for FY12 was $70m, so $40m less capex is substantial.

To summarize, my *GUESS* is that EHL's HY13 NPAT will be within its guidance (no further negative surprises) and 2nd half 2013 guidance will be higher than HY13. Chile and Canada will have positive results; maybe Indonesia, too. OZ will be mixed, with good news only for 2nd half year (not this past HY13). Dividend will be 1.5c to maybe 2c this half. EHL's share price might get a boost (maybe above 70 cents) if guidance looks positive, even if HY13 NPAT is no more than the $23m-$26m guidance. But it could test the upper 40s cents range again if more negative surprises.

These are just my thoughts and interpretations of limited information, so please DYOR.