was there a warning for nwh shareholders?

I raised a post on 12th. February headed "Is this a warning for NWH shareholders?"

It was a question in light of the FGE situation, and I was looking for constructive comment. My post was hinting at the need for caution, as that is how I saw things.

Unfortunately, some posters took umbrage at my comments and proceeded to respond accordingly.

It would appear that my comments didn't resonate their optimism.

Like it or lump it, NWH is a mining services company. It is not an FGE but it plays in the same backyard. FGE appears to have been caught up in aggressive bidding for contracts especially as opportunities became limited.

NWH would on occasions have been bidding against FGE and being aware of that, I believe they may have sharpened their quoting. The following figures indicate a progressive deterioration in profitability, especially when we look at Net Profit for every dollar of Gross Revenue. These figures have been extracted from recent NWH trading announcements, to the best of my ability - DYOR.

In the November 2013 AGM presentation the following comment was made "NRW reaffirms revenue guidance between $1-1.2Bn for FY14". That means revenue is expected to be about the same as for the 12 months ending 31/12/2013. Yes, NWH has recently won some large new contracts, however, their impact on revenue in the year to 30/06/2014 will be nominal - impact will flow more fully in the following six months. On that basis, I believe we will need to wait until the trading results announcement due Feb. 2015 to see any significant improvement (IMHO).

Additionally as I see things, there is an urgent need for NWH to keep a lid on costs - they are just as important (or more so) than revenue.

The adjustment to the dividend is perhaps the company saying to shareholders that "we are being prudent and we know that it is going to take time to turn things around"



1H/12, 2H/12, 1H/13, 2H/13, 1H/14,

610.5, 748.3, 810.7, 563.7, 520.9, Gross revenue ($M)

45.3, 51.8, 48.5, 25.6, 22.3, NP for half ($M)

7.4c, 6.9c, 5.9c, 4.5c, 4.2c, NP per $ of revenue

16.2c, 18.4c, 17.7c, 8.8c, 8.0c, Earnings per share

8c, 10c, 8c, 5c, 4c, Dividend per share

140.0, 138.0, 210.4, 131.0, 174.2, Cash on hand ($M)

145.5, 198.7, 239.2, 219.6, 214.1, Borrowings ($M)


Have a chew on the numbers above. Tell me I am wrong if you like, but please be kind!

I am still keen on NWH at the right price, and I expect that in the short term any downturn in the overall market will reflect noticeably on the SP of NWH, and that will be the time to accumulate.


Remember, DYOR carefully, as these ramblings are not from a licensed investment advisor.