NRW Holdings (NWH) -17.14%: A few issues in the NRW result today and the stock down 17% as a result. The issues broadly are around higher costs thanks to COVID which has driven lower margins and that has hurt earnings, at the EBITDA line this was a 10% miss however more in terms of profit (-26%). Top line revenue for the half was fine / inline at $1.168B and they reconfirmed full year guidance for revenue of $2.2-2.3B, confirming that $2.2b is already contracted, plus they have a huge pipeline of tenders in place. So clearly, the issue is not winning work, it’s about completing it which is always an issue with contactors. In this case, higher covid costs and higher staff turnover, restricted workforce etc has been the killer and this is something the company can see continuing in the second half. Patience now required here as we look towards 1. Better top line at the FY21 result and / or more diligence on the cost side.
MM remain positive NWH despite a weaker than expected result
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