ECONOMIC THEORY :
NRW HOLDINGS
- Healthy, performing well.
Has the ‘it’ factor in spades.
Beyond this as I am not qualified to give any kind of financial opinion I have resourced Robert Frost, head of the highly rated boutique smaller Australian equities manager, OC Funds ( a division of Copia ).
Like us, OC considers NRW Holdings to be a premium small company and I suspect it holds us tightly and long term somewhere under the 5% level.
Here is a chart of its 10 year performance stats:
View attachment 1430081
It has the ‘it’ factor too
Here is its December 2018 perspective on NRW Holdings.
https://www.ocfunds.com.au/wp-conte...mium-Small-Companies-Fund-update-20181231.pdf
“NRW Holdings Limited (NWH, -22.7%) fell heavily during the quarter despite a raft of positive announcements which paint a healthy picture for the business and its future growth prospects.
These included several material contract wins and extensions across the civil, mining and drill & blast divisions,
the securing of bank funding to repay corporate notes which will reduce the company’s cost of debt and, not least,
a material profit upgrade with H1 FY19 earnings now expected to be $45m, up over 100% on the same period last year and well ahead of consensus expectation.
Whilst the share price initially rallied on each positive announcement, it was short-lived with the stock progressively sold off over the quarter as the storm clouds gathered around the outlook for global growth, largely due to the ongoing trade war.
NWH is strongly positioned to deliver an excellent FY19 result but the market is obviously worried about
the earnings outlook for the sector.
NWH has a strong forward order book (currently in excess of $2b) and ought to be debt free by the end of the financial year.
The NWH civil business is well positioned to win a significant amount of work in the coming years on the iron ore replacement and sustaining tonnes projects from BHP, RIO and FMG which have approval to begin construction and are critical to the iron ore majors maintaining their production levels in the coming years.
It is, therefore, unlikely that these projects would be cancelled regardless of what transpires in the global economy because this would result in the iron ore majors having significantly smaller businesses going forward. In a promising sign, NWH has already been awarded some early works on BHP’s South Flank and FMG’s Eliwana projects.
No Rob isn’t my brother, but I do like his style and, looking at his other choices, I feel a family connection ( I have/had shares in a few thank you dear Navigator)
Has OC Funds been worried about the price fall at NRW?
Well if you read the report (as you will), you will find it has “added to certain existing portfolio holdings that we feel have been oversold.”...
so perhaps like many of those here it views the fall as an opportunity ?
Here is the link (which I have personally renamed ) again:
High Calibre Fund Managers Choose NRW because it’s a fantastic company NWH! NWH! NWH! rah! Rah! RAH!
And here, for the record , is Morningstar’s peer comparison for NWH off the Commsec page which includes forecasts of its future economic health:
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(20min delay)
