I may have pasted some of this analsis by M.Star on a previous...

I may have pasted some of this analsis by M.Star on a previous post. MS have kept 'fair value' at $6 but cut estimated FY17 EPS from 69c to 48.6cents! That's below my estimate from last CY of 50-55c. The debt situation has worsened considerably and i will re-assess my calcs some time next week. Meanwhile here is MS analysis of HY result:

WorleyParsons Misses First-Half Profit Expectations, Shares Remain Overvalued.
by Mark Taylor (02:25PM 20-Feb-2017)


WorleyParsons is an established provider of engineering and other professional services to the oil, gas, mining, power, and infrastructure sectors. It primarily delivers projects, including engineering, procurement, and construction facets. Hydrocarbons is the largest business, contributing 70%-75% of revenue. Minerals, metals, and chemicals contribute 15%-20% of revenue, and infrastructure 10%-15%. WorleyParsons has a global presence with about 28,300 staff in 44 countries. Extensive professional skills, solid delivery capabilities, global scale, and strong customer relationships saw Worley's earnings balloon during the China-driven resources boom. Returns on invested capital were higher during the boom, but numerous acquisitions have inflated the invested capital base. With oil and gas prices low, petroleum companies are cutting costs heavily. In the longer term, field depletion will drive investment recovery.

Analyst Note Summary
WorleyParsons’ 50% decline in underlying first-half fiscal 2017 NPAT to AUD 38 million was below our AUD 86 million expectations. We exclude AUD 59 million in pretax staff and other restructuring costs from the underlying profit but add back AUD 23 million in onerous lease contracts, something we consider business-as-usual in contracting. Despite our profit overcall, the AUD 6.00 per share fair value estimate stands, already well below recent AUD 10 share price levels, and we think sufficiently cognisant of ongoing tough conditions.

Worley says customers do not expect their activity levels to deteriorate further from here. In addition, the benefit of cost reductions are expected to reflect in second-half earnings. Our forecast for second-half earnings is little changed at AUD 82 million, driving reduced underlying fiscal 2017 NPAT of AUD 120 million or AUD 0.49 per share, down on our prior AUD 0.69 estimate. Our fiscal 2018 forecast is little changed at AUD 0.70 per share. A 12% increase in Worley’s contract backlog to AUD 4.7 billion compared with June is supportive of our thesis for earnings stabilisation and modest growth from here.

We make no change to our no-moat rating. The traditional engineering, procurement and construction space is competitive and competition is intensifying as the post-boom pool of work shrinks. We don't expect Worley to earn its cost of capital and project only mid-single digit ROIC's going forward. Worley is also segment- and activity-concentrated with revenue exposure to hydrocarbons and some minerals and metals more than 85%. In conjunction with too-high debt levels, the company is exposed to the commodities investment cycle feeding into very high fair value uncertainty.

Worley shares have fallen nearly 20% on release of first half results but at AUD 8.00 per share remain materially overvalued. Further recognition of ongoing near-term weakness in energy capital expenditure is the catalyst for the shares to derate to fair value.