Ann: Half Year Results, page-33

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I have often written how I value a share via a subjective PER, and I have on more than one occasion written that the Samsung knee to the groin is one of those difficult-to-value "soft" assets that should have some bearing on the share valuation of a stock. The contractual caps put around the Forrestful-Airport Tunnel project evidences the sort of contract-articulation terms that can often be so valuable when an unexpected disaster happens, and black swans are not that rare.

I used to proofread contracts and draft amendments as a service, and in many contracts words like ". . . only the Licensee  is licensed to use . . ." would cost $100,000 or so if the licensee wanted to outsource a function that required the use of a licensed product, whereas slipping ", or its agent," after "Licencee" was never rejected upfront. The extra three words obviated the risk of the licensor demanding payment for a new licencee (the outsourcing service supplier) if the original licensee later desired to outsource. I could provide other examples, where valuable alterations to contracts were easily effected by a few words that attracted little attention in the negotiation process, but which obviated well-known exposures.

On another valuation issue, I think we can assume good revenue for 2020, 2021 and 2022, but then what? Is there going to be a repeat of what happened when the last boom ran out of puff. You can see below how NWH and MND behaved after their common peak year, 2013. The huge Ichthys project softened 2015, 2016 and 2017 for MND, but that came to an end in 2018. Both companies are looking good for the next few years. I think NWH is going to travel well for 2023, and later, but that is a post for another time.

NWH
PER SHAR .... 2009 – 2010 – 2011 – 2012 – 2013 – 2014 – 2015 – 2016 – 2017 – 2018
Sales ($) .......... 2.05 ,,, 2.43 ,,, 2.91 ,,, 4.85 ,, 4.91 ,,, 4.05 ,,, 2.78 ,,, 1.03 ,,, 1.17 ,,, 1.85
Cash flow (c) .. 35.4 ,,, 28.4 ,,, 30.3 ,,, 61.9 ,, 42.2 ,,, 37.2 ,,, -16.9 ,, 17.1 ,,, 14.8 ,,, 20.2
EPS (cents) ..... 14.9 ,,, 15.1 ,,, 16.1 ,,, 34.7 ,, 26.5 ,,, 15.8 ,,, -26.0 ,,,, 5.7 ,,,,, 9.8 ,,, 12.2

MND
PER SHAR ....2009 – 2010 – 2011 – 2012 – 2013 – 2014 – 2015 – 2016 – 2017 – 2018
Sales ($) ...... 13.05 ,, 14.63,,16.23 ,, 21.01,, 28.52,, 25.27,, 20.08,, 14.62,, 13.27,, 18.46
Cash flow (c) 132.3,, 110.1,, 140.7,, 153.5,, 123.6,, 127.6,, 126.8 ,, 83.5 ,,, 118.5 ,, 55.0
EPS (cents) .....86.3 ,,, 95.5,, 106.9,, 139.5,, 170.6,, 150.3,, 113.9 ,, 71.8 ,,,, 61.8 ,,, 76.1