Woodside (WPL) shares rally on strong result
WPL +4.09%: Reported CY21 results today that were ahead of expectations. Underlying 2H21 NPAT of US$1,266m was ~27% above consensus while the final dividend of US$1.05cps was over 50% above consensus expectations. This is a very strong set of results and leads the way for the rest of the domestic sector. We’ve written multiple times in recent notes how the Australian operators have failed to perform inline with their overseas counterparts, todays result could well change this trend. Over the past few years, the chorus of investors demanding returns from the sector has grown louder, the US Shale sector has responded, the Super Majors have responded but up until now the Australian operators had not. This is the first time I can remember that an Australian Oil & Gas company has so comprehensively beaten consensus estimates and at the same time provided a return to shareholders via a big dividend rather than reinvesting for future growth.
Our analyst Clarky had the following to say which MM agree fully with: There is no question we’ve gone past the point of no return regarding the ‘Energy Transition’ – this time is different. However, fossil fuels will be required to facilitate this transition, there is not enough investment occurring in fossil fuels, and the transition is going to take a long time – more than a generation. In my view some companies in the sector are going to become cash machines, in the same way cigarette companies did post advertising restrictions in the 1970s. I suspect this won’t be the last time we see WPL reporting a double digit dividend yield (annualised) and exceeding earnings expectations….
