Some of you in the audience might have held onto WDS for several years and counting now. Maybe, you might also not fully comprehend what is going on at WDS. Well, I think this report was actually very insightful, I've learnt a lot myself when i dug into the WDS analysis content (the 100+ page document).
Before i forget to mention!!! I havent fixed up the FX conversion yet. So.... 27% is looking more like 96%. Now, let's not get too excited yet. Let's ask ourselves, why is there a gap?
The gap is more reflective of concerns relating to execution of the capex program, not that WDS is fundamentally flawed. Basically, a case of show me the money first, then we will recognise it.
As we pass the peak of capex spend, free cash flow is expected to start improving. What about the projects? Scarborough is 86% done, Trion is reaching the half way mark, Louisiana LNG is only just getting started. These three programs dont fully wrap up until FY30, and still needn to prove their worth.
As I thought aboutn it for awhile longer, even at this point in time, the scarborough's 86% completion does not mean a whole lot in my opinion. An 86% is not 2x better than a 43% project completion. All it reflects back, is the build up/development phase of the project. During development, nothing is being produced. And the parts that are most crucial to proving its worth, is the commissioning, the ramp up phase, the delivery of lng, and whether the project ends up making economic sense (i.e. cost vs lng price in the future). Until we cross that hurdle, it's no surprise that the market is pricing WDS the way it has. Nonetheless, report has uncovered several affirming data points such as project sell-downs, showcasing investor interest in the project. Assuming they know more than we do.. its a step in the right direction.
Before i forget to mention!!! I havent fixed up the FX conversion yet. So.... 27% is looking more like 96%. Now, let's not get too excited yet. Let's ask ourselves, why is there a gap?
The gap is more reflective of concerns relating to execution of the capex program, not that WDS is fundamentally flawed. Basically, a case of show me the money first, then we will recognise it.
As we pass the peak of capex spend, free cash flow is expected to start improving. What about the projects? Scarborough is 86% done, Trion is reaching the half way mark, Louisiana LNG is only just getting started. These three programs dont fully wrap up until FY30, and still needn to prove their worth.
As I thought aboutn it for awhile longer, even at this point in time, the scarborough's 86% completion does not mean a whole lot in my opinion. An 86% is not 2x better than a 43% project completion. All it reflects back, is the build up/development phase of the project. During development, nothing is being produced. And the parts that are most crucial to proving its worth, is the commissioning, the ramp up phase, the delivery of lng, and whether the project ends up making economic sense (i.e. cost vs lng price in the future). Until we cross that hurdle, it's no surprise that the market is pricing WDS the way it has. Nonetheless, report has uncovered several affirming data points such as project sell-downs, showcasing investor interest in the project. Assuming they know more than we do.. its a step in the right direction.