Wood Group (john) Share Discussion Threads

[ashkv] 14/6/2022 15:12

Wood Group should dual list in the USA - useless UK market is severely undervaluing the share...

[fsawatcher] 07/6/2022 12:11

Blackrock gotta close out

[colonel drake] 06/6/2022 12:36

New broker note out too with 330p target. Barclays.

I'd agree with that. 330p is where I think it's fair priced until deal is officially inked and then another 30%+ up to 420's into Q4 or Q1 2023.

Service sector on fire and O&G market well behind development and exploration curve. Billions required to get supply added.

[colonel drake] 06/6/2022 08:13

Looking fruity this morning.

Director buy at 220p looks well timed. 22k shares as well.

I only managed 221p as a top up but very happy with the way the shorters are trying to get out of this one.

The deal was well received by Canadians and looks 99.9% certain to complete imho.

It's worth the entire market cap of WG yet equates to just over 25% of the business.

That's how mad this market is... we should be at 400p+ right now.

[colonel drake] 01/6/2022 14:50

US markets open and Blackrocks spivs get to work!

That's a 5p jump in the price since they got plugged into the book.

Pretty clear they want out of that 1.8% short position and must be thanking the UK desk boys for doing a sterling job this morning.

I was always investing in Wood Group for the 2023 and 2024 years. They will be very good. But did think that the asset sale would get this into the 300p+ mark with ease.

Blackrock have a substantial long position in WG too so don't mind the hedge games but when they are done, they are playing the long game and that bodes well.

The landscape for order book builds in 2022 is huge. Just wait for those deals to come in and the share price will start to motor. For moment, the market is taking a short term view of a long term business which makes no sense at all.

Asset sale today represents circa 25% of total business and is worth the entire market cap today (almost!).

That's bonkers!!

The debt boys will have arbitrage in place too so my guess is they will unwind big time when the deal gets concluded which I am presuming means any rev between now and final signature comes out way and not back dated.

[colonel drake] 01/6/2022 14:19

They haven't ruled out a special divi but strategically could deploy cash through accretive measures / opportunities.

The reality is... this was a big business with debt rising fast due to past unforeseen events.

Now it's the opposite... it's effectively debt free, has very bright order book and looks to be back to delivering serious profits in 2023.

This a bit like buying Glencore at 200p a while back before the commodity price surges.

Glencore now 525p and that's after a bucket load of divi's.

[mcntrader] 01/6/2022 11:44

No, ordinary dividend was never explicitly mentioned to my knowledge. Perhaps some entities 'assumed' that a one-off special dividend could be paid, but again this was never mentioned to my knowledge.

[saltaire111] 01/6/2022 11:35

Did the market expect immediate restoration of dividend payments?

[colonel drake] 01/6/2022 11:11

It's just inflation on current contracts. Was expected after PFS update so market having a laugh.

Business would be 10%+ up on last year had inflation not kicked in.

Next year business expected to be around 20% up but obviously reduced slightly (20% or so) due to recent asset sale.

PFC still trading solid after they confirmed the same benign basic flat 2022 projection so no idea why market thinks WG fair game. My guess is the shorters are driving hard to get price down to levels whereby they can then switch out and buy back stock. Sometimes you have to sell down hard to essentially buy back the shorts.

Plenty of traders buying in now and I expect the stock to see a sharp bounce back once dust settles. They want to buy back shorts in falling market not rising market.

Anyway... great opportunity for long term investors as 2023 looks fab and 222p is an absolute bargain.

There's zero risk this asset deal falls through imho as sector is on fire and demand high... if the buyer drops out there will be a queue to replace them. It's like getting a bargain on a house price... you don't let that slip away.

[flyfisher] 01/6/2022 11:05

Thanks MCN, i seek to understand.

[mcntrader] 01/6/2022 10:58

Not so fast Flyfisher ... i'll respond later, but with respect, your post is not accurate on a few points.

[flyfisher] 01/6/2022 10:56

It looks like they have sold the main source of profit in order to restore banking covenants, which are likely to be breached before the deal completes.

They observe that on dec 21 year end figures they will be cash positive, but have indicated a debt ebitda target that would imply negative cash flow during 2022.

Broker forecasts for 2022 were around 11c eps, removing the earnings of the sold assets would seem to indicate a loss of 2c for the year for the ongoing business.

So having sold the family silver, they are now left with the rump of the business that is currently unprofitable, but recovering.

[mcntrader] 01/6/2022 10:27

Drake - my only question mark is around the debt covenants being adjusted upwards (which I think is an acknowledgement that cash-in-bank will only be received in a few months) and therefore they might be in trouble on existing covenants. This might imply to some that the underlying business is not trading as strong at the moment. Again, the question was asked and answered in the call this morning and i was satisfied on that point. Notwithstanding, I think the deal will essentially cure a lot of underperformance in the business and give it a margin of safety.

[colonel drake] 01/6/2022 10:17

The biggest threat and main reason for share price fall from 400p or even 600p levels was all about the $1.4bln debt servicing and contracted business/rising costs through Covid and inflation. Net result... dividend pulled and real concerns over debt default.

That was fair.

But those threats that drove share price down are no longer there. They have been replaced by a bullish sector backdrop due to Russia/Ukraine war.

The business in 2022 is likely to trade flat but that's with debt servicing factored in, some covid issues (early part of year) and of course the big being inflation. So basically the business is capable of absorbing all that now. As business is booming, inflation drops, debt servicing goes (to some extent) the cash flows are going to be seriously good. Dividend returns... what's not to like.

I remember the share price dip from 230's to 206p a few weeks ago which was then replaced by a surge back to 250p+ based on zero news. So it's clear that the stock moves around based on the hedge funds games but mid to long term the price always sees to want to return to 250p+. Based on news today, it will surely punch through 250p+ and retest 400p levels on resumption of Divi... but that higher level likely some 5 to 6 months off.

I'm a buyer as this is nuts!

[mcntrader] 01/6/2022 10:09

It's a head scratcher ... I'm trying hard to find a material criticism in the transaction. It can only be good ... are they assuming there's a problem with antitrust law? Surely not. Were they looking for a special dividend? Surely not. I see only positive's here: balance sheet restored; cost base brought back in line; dividend to be restored; cash cash cash ... geez

[ashkv] 01/6/2022 10:06

This is nuts - I can't believe the share price action and the lack of volume...

[colonel drake] 01/6/2022 09:37

So if BlackRock were reducing by 0.5% (which is a decent wedge) just a few days ago, that would mean they were closing out at averages near 241p to 250p.

The Sale price today is about $100m down on the expected $2bln but it's clear that BlackRock were in no mood to sit on that Short level.

The larger II's will be quite happy to see BlackRock doing their thing as they all want in big time and as cheap as possible.

Volume is so low for a stock of this size on a deal RNS like that. Seems odd.

Like the PFC update, business performance is flat for 2022 due to inflation margins squeeze. But the as the order book builds, inflation subsides, this will rocket.

[colonel drake] 01/6/2022 09:13

The stock has been hammered down due to debt concerns and covid. Now both are resolved, are you kidding me with this share price!!!

The stock was at 265p when they announced intention to sell nevermind confirming it today.

Sector on fire and this is going back to 400p fast once the shorters have done their thing.

Blackrock reduced their short by 0.5% just days before this announcement.

They want out... make them pay and time to fill the boots up!

[saltaire111] 01/6/2022 09:07

Bizarre market reaction to today’s rns.

Does the market still have concerns that the deal could fall apart?

Very odd.

Salty.

[bwana4] 01/6/2022 09:06

Guys, I don't know if this sale was already priced in the share price.
The last few days the share price has been bought down !! No doubt by Black Rock.
These people play dirty, would they have learned about this before hand!!
Shorts always muddy the waters !!
ATB and GLA.

[ashkv] 01/6/2022 08:58

Blackrock has a short position in WG

Volumes seem insanely low for WG - given the news delivered...

[colonel drake] 01/6/2022 08:33

Is this market nuts??

That $1.9bln was never priced in. Sure.. the deal still needs to complete but highly likely to go through.

Agree re blackrock... they will do whatever it takes to try and get themselves out of that short position as it was clearly a hedge against this deal being at a lower price or not happening at all.

This should be 300p+ and I fully expect it to be around there once Blackrock have taken it on the chin!

[fsawatcher] 01/6/2022 08:19

black rock scum innit

[colonel drake] 01/6/2022 07:14

BOOOOOOMMMMM!

$1.9bln Sale done and dusted.

Some shorters going to get fried today. Blackrock have over 1.8% short!