WSP Straw (18/2/21) 1H FY21 Results

Half year results for WSP are disappointing principally for the fact that US sales growth continue to stall when the current share price (and my valuation at $3.80 – unchanged) requires that they grow rapidly in the US market (300% this year from a low base).  Also, gross margins are going the wrong way, down to 60.7% (from 62.0% 1H FY20), they need to go up, not a lot, but up all the same.

The bottom line & EBITDA figures are reasonable due to ANZ top line growth and cost controls in Admin expenses which are good.  Customer growth was solid but not enough for its current size, up to 707 or 38.9% on PCP, of the 77 added only 7 were in the US. 

As it stands my Bear case valuation of $2.17 (75% weight) is looking significantly more likely than my Bull case $8.68 (25% weight).