Because we are close to seeing the Interim Reports, if I remember, I'll respond on the issue of “NWH doing well”. This delay would allow me to replace opinion on things like the Order Book with facts, and if the facts do not stack up to my expectation, I'll change my mind.
On thin margins, this is a hobbyhorse of mine. I have written more posts on the requirement to focus on margins in the NWH subforum than I have fingers. Relative to other listed firms in the sector, I think NWH is better than average, but there is always room for improvement. The sort of margins that LYL, which I do not hold, makes are far higher.
On growth for growth's sake, we sing from the same hymnbook. I also far prefer organic growth to growth via acquisitions. Companies that make a habit of growing via acquisitions often fail – a well-researched topic on which one could write a lengthy opinion piece.
On NWH's acquisitions, I write the following:
Acquiring Hughes Drilling may not have been a good idea, because it later appeared that the drilling rigs required a great deal of corrective maintenance. Anyhow, the dollars were small, so it is not worth too much comment.
Acquiring Golding could well have been a good idea, because it widened NWH's geographic footprint to the Eastern states. I do not follow the Goldings business closely enough to have a strong opinion either way.
Acquiring RCRMT was a snatch at $10m, and it did add to NWH's relatively low-level skillsets, and it, with DIAB, allows NWH to get into more maintenance work, which is less cyclical.
Acquiring BGC Contracting may turn out well if its pricing for jobs can be disciplined, and its cock-ups and need to litigate diminished. BGC brings to NWH a strong presence in Alliance JVs, and that allows NWH to get into road construction as an anti-cyclical alternative to relying on mining, and iron-ore mining in particular. I understand that Alliance contracts are safer than PPPs (Public-Private Partnerships), and they are usually contracted on a rate basis, rather than being a fixed-price quote. A poster like Rangerandherra could shine more light on this topic than I can.
I know this sector is cyclical, and CAPEX plus employee heavy, but rather than avoid the sector, I hold stocks in other sectors. I probably should sell some NWH, because when it was cheap, I bought heavily. I also hold MND, but it is a smaller investment.
NWH Price at posting:
$1.69 Sentiment: Hold Disclosure: Held
(20min delay)