“One painful lesson on the short side has been that mere absurd...

“One painful lesson on the short side has been that mere absurd overvaluation is not sufficient reason to be short” Whitney Tilson.

Sure can relate to that!

WOR gave comprehensive update yesterday and I've amended my calcs for fy18. First some commentary from The Oz who were at briefing:

'Speaking to The Australian, Mr Wood said the company was starting to see an increase in business as companies took action to address their declining production levels.
“Oil and gas demand is growing at 1 to 1.5 per cent per annum while you’ve got depletion running at 6 per cent, so the big issue is replacing ageing supply across the sector,” Mr Wood said.
“That gives us a high level of confidence in that you’re not at the mercy of a growth in the overall demand, it’s just keeping up that is going to drive the need for investment.”
'He (Wood) also pointed to modelling by Goldman Sachs, which projected that the annual value of projects subject to final investment decisions worldwide would jump from $US56 billion ($75.35bn) this year to $US147bn by 2019.
“That’s just a reminder that we are at the bottom of the market and it’s been a deep bottom. Things are just turning now,” Mr Wood said. “Do we think we will get back to the levels in 2013? No we don’t, but we do know that it has to be considerably more than it is now.”

Interesting to see WOR rev for 4Q is down 20% from the 3Q in fy18.
Oil risen strongly esp over past 3 weeks. I expect revenue will grow in fy19 but with similar margins as current. SP very strong as POO rises but SP is way above IV imo. Will look to increase my(short) position should SP keep surging. Using info from yesterday's update:

Aggregated Rev: FY18 4895m
Underlying EBIT: FY18 286m
Underlying NPAT: FY18 164m (BP 183m)
Underlying EPS: FY18 61c (BP 68c)
Dividend: FY18 25c unfr (BP 29c)

The statutory NPAT will be less due to change in tax regime in USA and along with methodology WOR use to calc underlying NPAT. Plus some bad debt seems to have been repaid reducing overall debt from 771m.

Using a SP of $16.40:
EV/ebit = 4477+690 = 5167/286 = 18x which is v.high.
WOR don't use ebitda so i'll estimate at 5167/350 = 14.76x which is also v. high.

I'll post Morningstar's analysis and that of Clime next time.