Strong FY22 result in line with UBSe/consensusWorley reported a strong FY22 result, with underlying EBITA growth of 18% to A$547mn, in line with both UBSe and consensus estimates. Importantly, the result showed continued earnings momentum, with 2H22 EBITA 16% above the pcp, in line with company guidance for sustained earnings growth. Cost-out benefits, alongside an improvement in mix and rates, drove an increase in 2H22 EBITA margins to 6.3% vs. 1H22 5.7%, also consistent with the guidance that 1H22 EBITA margins would be sustained into 2H22. Worley reiterated its intention to invest A$100mn in strategic opex over the next three years to support its sustainability growth agenda.FY23 growth outlook to be supported by improving backlogWhile Worley did not provide formal earnings guidance for FY23, the company noted it expects both improved revenues (UBSe +13%) and for the average underlying EBITA margin in FY22 (6.0%) to be at least maintained into FY23 (UBSe 6.4%). As such, we forecast FY23 EBITA growth of 19% to A$650mn (vs. VA cons. A$653mn). We expect positive momentum in the following leading indicators to support our growth forecast: (1) Headcount up 8% to 51,300 (vs. Jun-21), (2) Backlog up 8% to A$15.4bn, and (3) Factored sales pipeline up 30%, including 57% growth in the Sustainability sales pipeline.Buy. An energy transition winnerWe reiterate our Buy rating on Worley, with the stock offering significant earnings leverage to a potential four-fold increase in global energy investment and decarbonisation projects (see here). We think this should drive a 10-year EPS CAGR of 10% (FY22-FY32) which assumes 11% growth in energy transition investment, offset by a longer-term 3% decline in fossil fuel investment. We continue to see an attractive valuation, with the stock trading at a FY23 P/E of 19x. Our A$17.00 PT implies a FY23 P/E of 22x, which is below the 23x average the stock traded on through the early stages of the last oil gas related energy investment up-cycle (2004-12).Valuation: 12m price target A$17.00p/shOur price target of A$17.00 (was A$16.40) remains based on an equal-weighted average of our DCF and EV/EBITDA based valuations.
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Mkt cap ! $7.733B |
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$14.65 | $14.80 | $14.63 | $16.02M | 1.088M |
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1 | 2079 | $14.64 |
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1 | 2079 | 14.640 |
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9 | 10443 | 14.600 |
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14.680 | 2470 | 1 |
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14.700 | 4354 | 1 |
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Last updated 15.59pm 30/05/2024 ? |
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INFINITY LITHIUM CORPORATION LIMITED
Ryan Parkin & Ramón Jiménez Serrano, Managing Director & Executive Director
Ryan Parkin & Ramón Jiménez Serrano
Managing Director & Executive Director
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