Partial from FNarena article. I love it. Seems macquarie(73c) just havent updated their call on CLO yet.
Liquified Natural Gas, or LNG as it is more commonly referred to, is in a major development phase in and around Australia given a number of companies are attempting to develop projects to sell gas, particularly into Asian markets. These include projects in Papua New Guinea featuring the likes of Oil Search (OSH), Gladstone in Queensland where Santos ((STO)) is just one of several companies attempting to be first to market, and Woodside's ((WPL)) Pluto project.
Another potentially major LNG operation is the Gorgon Project in Western Australia, where Chevron is the major player with a 50% interest and Shell and ExxonMobil with 25% stakes each. The field is proposed to deliver as much as 15 million tonnes per annum of LNG via a processing facility at Barrow Island, with the scale of the project meaning significant potential for work for contracting companies.
Credit Suisse pointed to this today in a note on Clough ((CLO)), the broker noting the company has a 20% stake in the Gorgon EPCM contract, which is potentially worth as much as $600 million in revenue to the group over five years, assuming the project receives the go-ahead as expected.
There is scope for other work as well as the company is awaiting a decision on its tender for a contract to construct a jetty as part of the project, while the broker estimates the company could earn as much as $400 million in revenues from work on PNG LNG projects as well.
Given such an outlook, and the likelihood at least some of this potential work flows through, the broker rates the stock as Outperform, with a price target of $1.15. This target puts it as the most aggressive among those to cover the stock. The FNArena database shows both RBS Australia and Macquarie also rate the stock as Buy, but their targets stand at $1.05 and $0.73 respectively
CLO Price at posting:
93.0¢ Sentiment: LT Buy Disclosure: Held
