WorleyParsons (ASX:WOR) provides professional engineering and management services to the energy, resource and complex process industries.

It offers a broad range of services, from feasibility studies to design and project services, and is exposed to a number of sectors.

The group is a leader in its industry and has established long-term relationships with a number of blue-chip companies.

Despite facing obstacles in FY11, WOR was able to grow its profit and revenue, with the Hydrocarbons business driving the result.

Moreover, WorleyParsons is ideally placed for the future, as the lure of high energy prices is likely to drive demand for its services from the bigger oil companies.

Hyper about Hydrocarbons

The majority of WOR’s earnings are in the Hydrocarbons (oil and gas) division.  WOR’s leverage to the energy market is a key attraction, particularly as demand for oil and gas is expected to strengthen due to emerging market growth.

The oil supply/demand imbalance (dwindling oil supplies vs. growing energy demand) is only expected to worsen due to this growth.

The lure of energy price appreciation is likely to encourage oil companies to ramp up capex spending, which puts WorleyParsons in an ideal position to accelerate its contract win rate.

WOR has had a positive start to 2012, winning two major contracts in January.  The first was a US$115 million contract with ExxonMobil, and the second was a US$180 million contract with Chevron (split with a 50/50 JV partner).

LNG is the future

The big oil companies have recognised that the world is moving towards more unconventional sources of energy such as LNG.

There are a number of massive projects being undertaken throughout Australia, and WOR has had a hand in some of the key ones such as Pluto and Wheatstone.

WOR’s experience in developing LNG projects, coupled with the established relationships it has with its blue-chip clients, makes it ideally placed to benefit from this increased focus on alternative energy.

Outlook

As the global growth engine continues to shift from developed economies to the developing regions, there will be increased demand for commodities.

As mining companies look to meet this demand, there is going to be a significant increase in capex activities over the coming years.

This will strengthen the market for WOR’s services, providing it with plenty of growth opportunities, especially in the hydrocarbons space.

WOR is in a sound financial position and is expected to continue the positive earnings momentum into FY12.

Based on one year forward earnings, WOR is trading at a more than 50% premium to the industry average.

Whilst this may appear to suggest the company is overvalued, we feel the premium is justified when considering WOR’s relatively stronger growth prospects, cash flow generation and a five-year average return on equity of over 20%.

The long-term relationships WorleyParsons has fostered with its blue-chip clients is likely to yield considerable benefits for the company, particularly as miners look to capitalise on rising commodity prices as well as the world’s shift to alternative energy sources.

We believe that WOR is poised for growth, and is defiantly a stock to watch for 2012.

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News Corporation (ASX:NWS) is a diversified media conglomerate with interests in all geographic locations around the world, and in all facets of the media. The principle activities of the company include printing and publishing, books and magazines, television broadcasting and production including both free to air and pay television, and film production and distributions.

Today, ASX 200 listed News Corporation announced its December quarter earnings, showing a net profit of $984.49 million up 65% compared to the same quarter a year ago.

The earnings rise came despite a $33.44 million cost for restructuring the group’s British and Australian newspaper divisions.

NWS reaffirmed its outlook for 2012, saying it still expects the company’s overall operating income to rise in then low-mid double-digit range for the year.

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Australian Stock Report presents the 2012  Portfolio Review.

Have you ever wanted to know what the “must-have” stocks are that should be in your portfolio? Do you know what 2012 has in store for the markets? Our Panel Does! Come and hear them present a review of your portfolio!

Here’s how the Portfolio Review works: List 5 stocks from your portfolio, or in which you are thinking of investing. Our panel of experts will tally the requests and select the 12 most popular stocks (and a few of their own) to thoroughly analyse and present their results live at the Review. The experts will then host a Q & A session to discuss current market valuations, trends, and their expectations for local and international markets in 2012.

Even if you don’t get all of your picks reviewed, you’ll get the benefit of comprehensive research on no less than 12 of the most interesting stocks on the Australian share market for 2012: What to buy, what to hold, and what to get rid of!

The Panel consists of:

Geoff Saffer
Head of Corporate Research
Australian Stock Report
Fundamental Analysis

Carl Capolingua
Head of Education
Australian Stock Report
Technical Analysis

Kel Butcher
Professional Trader, Author, Trading Coach
World Markets

Your 2012 Portfolio Review Ticket Includes:
>> a copy of Kel Butchers’ latest book
>> sumptuous buffet lunch
>> refreshments on arrivals

Portfoio Review Locations and Dates:

Sydney - Saturday, February 18, 2012 @ Sir Stamford at Circular Quay, 93 Macquarie Street.

Registrations: 8:30 AM, Duration: 9:00 AM – 13:30 PM. Click now to reserve your seat.

Melbourne - Saturday, February 25, 2012 @ Crowne Plaza, 1-5 Spencer Street.

Registrations: 8:30 AM, Duration: 9:00 AM – 13:30 PM. Click now to reserve your seat.

Brisbane - Saturday, March 3, 2012 @ Brisbane Convention & Exhibition Centre, cnr Merivale & Glenelg Streets.

Registrations: 8:30 AM, Duration: 9:00 AM – 13:30 PM. Click now to reserve your seat.

Perth - Saturday, March 10, 2012 @ The Studio Room, Level 2, Burswood Convention Centre
Bolton Ave & Great Eastern Hwy.

Registrations: 8:30 AM, Duration: 9:00 AM – 13:30 PM. Click now to reserve your seat.

Tickets for the Portfolio Review are only $44 (single) of $66 (double). Click now to learn more about this must attend event.

National Australia Bank (ASX:NAB) is one of Australia’s “big four” banks, with a focus on regional banking, wealth management operations, international capital markets and institutional banking business. Brands within Australia include NAB and MLC, and the group is represented in New Zealand by Bank of New Zealand. In the UK the brands are Clydesdale Bank and Yorkshire Bank.

Financials stock, National Australia Bank released its first quarter trading update which showed 1Q FY12 earnings of approximately $1.4 billion, 8% higher than the previous corresponding period.

The bank said that revenue was driven by wholesale banking and to a lesser extent, MLC and NAB wealth.

NAB also revealed that it will undertake a strategic review of its UK operations, with a view to reposition the arm to deal with the current economic situation in the region.

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Downer EDI Ltd (ASX:DOW), provides engineering and infrastructure management services to the public and private rail, road, power, telecommunications, mining and resources sectors in Australia, New Zealand, Asia and the Pacific. Downer provides rolling stock services, drilling services for the exploration industry, mine planning and management services and highway maintenance.

Industrials stock Downer EDI today announced it has been awarded a six year magnetite mining contract with Karara Mining for provisions of services at its iron ore project in Western Australia.

The contract which commences this month has total estimated revenue of approximately $570 million over the six years.

CEO Mr Grant Fenn said the contract will enhance Downer’s exposure to the expanding iron ore sector and also increase its geographical presence in Western Australia.

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James Hardie Industries (ASX:JHX) is a leading international building materials group that produces a wide range of fibre cement building materials used in the exterior and interior of residential and commercial buildings.

The company is also the largest seller of home siding (imitation wood) in the US, and produces fibre cement in the US, Australia, New Zealand and the Philippines.

Approximately 80% of JHX’s sales come from the housing industry, and the majority of this exposure is via the US housing market.

Although the US property crash has been a millstone on JHX, recent evidence suggests the market may have turned the corner.

JHX focus on efficiency and market share gains has placed it in an advantageous position to benefit from increased US housing activity.

US housing recovery

Although the US housing sector has been in a well established decline for much of the past five years, recent evidence is pointing to a long-awaited recovery.

Among the relevant housing indicators for James Hardie are housing starts and building permits.

Housing starts measure the number of new monthly building constructions, whilst building permits are more of a leading indicator in that they measure the number of new monthly residential building permits.

Since May 2011, both these indicators have been steadily rising in a sign Americans are beginning to take advantage of the country’s record low interest rates.

Furthermore, we see this momentum continuing due to the slowly strengthening US jobs market and the Federal Reserve’s pledge to maintain low interest rates until the end of 2014.

Operating results

In late November, JHX reported a 1Q12 net operating profit of US$41.2 million, which was double its result in 1Q11.

Despite reporting low demand, James Hardie was able to achieve its profit on the back of operational improvements such as a reduction in fixed costs, as well as an increased share of the fibre cement market.

This increased market share, positions JHX well in the event of an acceleration of the US housing recovery.

Outlook

JHX forecast FY12 net operating profit of US$126 – US$140 million.  Although management was cautious about the outlook for US housing, recent data points to a noticeable pickup in this industry.

With US employment inching higher, housing affordability high and the Fed committed to a record low interest rate environment, there are enough incentives to drive continued improvement in residential construction activity.

We at Australian Stock Report believe that a focus on cost control and increasing market share has placed JHX in a strong position to leverage off any US housing recovery.

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Woolworths (ASX:WOW) operates supermarkets, specialty and discount department stores, liquor and electronics stores throughout Australia. Woolworths also manufactures processed foods, exports and wholesales food and offers petrol retailing.  The Company also operates hotels which includes pubs, food, accommodation, and gaming operations.

ASX Blue chip supermarket giant Woolworths today announced 2Q sales growth of 5.1% to $14.1 billion compared to the previous corresponding quarter, this was in line with market expectations.

The 2Q sales results bought the 1H FY12 sales to $29.7 billion, a 5% increase on the previous year.

WOW also announced that it will sell its Dick Smith consumer electronics business following a strategic review that was announced in November.

Since the review the company said it has received a number of unsolicited approaches in relation to Dick Smith.

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CSG Ltd. (ASX:CSV) offers computer and other technology services. The Company offers information, technology, and communications project management and outsourced infrastructure support; applications development services; and sales of document management solutions and telecommunications services.

Small cap stock, CSG today announced that is expects NPAT for the half ending 31 December to be within the range of $9 million – $11 million, down from the $19.2 million in same half in FY11.

The company said the NPAT included a one off cost of $2.1 million in the last quarter of CY12.

CSG cited challenging trading conditions, but did expect an improved performance in the second half.

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Mirabela Nickel (ASX:MBN) is a mining company focused on the production and sale of nickel concentrate.

The miner’s key asset is the Santa Rita nickel operation in Bahia, Brazil.

MBN achieved its production ramp up goals in 2011, successfully upgrading the Santa Rita’s plant capacity to 7.2Mtpa of ore milled, from 4.6Mtpa in 2010.

However the ramp up was also accompanied by rising cash costs, which detracted significantly from an otherwise solid set of December 2011 quarter production numbers.

Costly cash

Mirabela Nickel announced its December quarter production report today.

Nickel output climbed 9% from the previous quarter, helping MBN to meet its 2011 production target of 15,854 tonnes.

However the production numbers were overshadowed by a disappointing rise in cash costs.

Cash costs jumped 11% on the quarter to US$7.42, as the higher output was accompanied by higher plant costs and lower productivity.

Additionally, mining costs rose amid increased expenses relating to drilling activity.

The ramp up in quarterly production was thus poorly executed due to the company’s own efficiencies as well as industry cost pressures.

Risk on

Another concerning aspect of the production release was the almost 50% fall in MBN’s cash holdings from the prior quarter.

A significant part of that outflow was due to the closing out of the company’s nickel and copper hedges.

The lower cash balance in addition to a new US$50 million debt facility entered into by a Brazilian subsidiary, raises MBN’s risk profile in a period of economic uncertainty.

Outlook

MBN has raised its 2012 production guidance, targeting 20,000 – 22,000 tonnes of nickel output.

As mentioned, however, greater output is not necessarily a good thing when it is accompanied by higher cash costs.

Mirabela Nickel has commenced a cost reduction program, which aims to lower cash costs towards US$6/lb by the end of the year. However that is largely dependent on the proper implementation of the program.

Although a return to steady state production may help, cost reductions will also be linked to the favourable renegotiation of MBN’s major contracts.

Having recently closed out of its nickel hedges, MBN is now fully exposed to the movement in commodity prices.

Unfortunately, there is also considerable uncertainty surrounding nickel prices, with brokers Morgan Stanley and Goldman Sachs recently downgrading their forecasts amid concerns about oversupply.

We at Australian Stock Report believe these headwinds are likely to weigh on MBN’s share price for a while yet.

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Alesco Corporation (ASX:ALS) is small cap stock that is involved in the marketing and distribution of industrial products to the building and renovations, construction and mining, scientific and testing and automotive industries.

ALS distributes products such as cabinets and panelling, earthmoving and truck tires, garage door openers and laboratory testing equipment.

Alesco Corp today released their 1H FY12 results which showed a first half net profit of $7.2 million, in line with the market guidance provided in August 2011.

The company also reported an EBIT down 40% to $15.3 million, which included a trading loss on Parbury of $4.7 million

CEO Mr Peter Boyd said that given the market condition and earnings levels, each business generated solid cash flows and has solid growth opportunities for the future.

Alesco also announced a fully franked dividend of $0.03 per share up from $0.015 in the previous corresponding period.

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