"It's often said the sharemkt thinks 12 months ahead, but has Mr...

"It's often said the sharemkt thinks 12 months ahead, but has Mr Mkt done the sums on what FY19 revenue is likely to be? Various Oz govts are still pouring money into renewables and MND is placed to win some of it. Otherwise, despite gains in efficiency, FY19 will be leaner than current FY. Given the circumstances an SP of $15.55 is high. Yet everything outlined above was well known back in late Nov '17 and the SP hit $19.80! Was it 'irrational exuberance'?"

I'll say again, lest I haven't made my feelings here clear enough already, I (personally) wouldn't be a buyer of MND at current prices. Far from it.

That said, it appears to me that while the distortion in FY18 (especially in H1), due to the Icthys work, will set a high hurdle for revenues in FY19, it is also true that eng & constr (E&C) revenues in the H1 period are growing at very healthy rates (1). Also, on my viewing there appears to be very healthy growth in maintenance & service (M&S) revenues outside of the oil & gas space. These are revenues that can be thought of as adding to MND's prospects, unlike the mixed feeling one may have about gains in M&S revenues in O&G (2).

It appears to me that O&G E&C revenues in FY18 will possibly be in the order of perhaps $200m greater than what would have been the "run rate", thanks to the Icthys "distortion". On the other hand, E&C in infrastructure seems to be adding perhaps $60m per year, and M&S outside of O&G appears to adding over $100m on an annualised basis. When you also consider that M&S in O&G can be expected to have substantial growth ahead of it, and the fact that E&C in resources outside of O&G appear to have stabilised (Australia wide) and may show improved prospects in the next few years, I don't see as gloomy a future as what you are painting. I also don't think the short term pain of getting over the "Icthys hump" will be all that dramatic.


I find this quote quite comical:
"It's often said the sharemkt thinks 12 months ahead, but has Mr Mkt done the sums on what FY19 revenue is likely to be?"

"Looking ahead", and obsessing about the near term (I consider FY19 to be exactly that), is exactly what "Mr Market" does. So there is some irony in citing Mr Market in this way. Ben Graham, who coined the term, would probably turn in his grave.


(1): It may not be winning as many contracts here as CIM, but then Cimic is several times larger than those of MND (with revenues that are, what, 5 times greater or more?). In the infrastructure space, this difference in size is even greater, substantially. So this is not a fair comparison.

(2): We already know about the growing M&S revenue stream in O&G. This may, to a degree, be a bitter pill to swallow, as it generally comes with diminishing E&C revenues).