Goldman sees Worley as an undervalued green energy leader. Pic: Getty Images
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- Sustainable fund assets in Asia-Pacific hit $250 billion
- Worley leads green energy projects and sustainability efforts
- Goldman sees Worley as an undervalued green energy leader
A recent report by Goldman Sachs shows that sustainable investing in Asia-Pacific (APAC) has reached a milestone, with the region’s sustainable fund assets rising to an all-time high of US$250 billion in Q3 2024.
The region is seeing an increasing interest in funds that focus on green energy, water, and climate solutions, suggesting investor sentiment may be shifting positively.
Goldman says there are several companies in APAC that are catching the eye of sustainability-focused investors.
For example, Sungrow, Hitachi, and Proya Cosmetics are recognised for their strong sustainability practices.
Companies focused on energy, water, and climate technologies such as TCL Zhonghuan, Beijing Enterprise Water, and Yangtze Power are also gaining traction among global sustainability funds.
And on the ASX, one company that’s gaining a lot of attention for its role in sustainable projects is Worley (ASX:WOR) .
Why Worley?
Goldman said that if you’re looking for a company that’s making a difference in the shift towards a more sustainable world, Worley is one to watch.
Worley may not be a household name for the average investor, but it’s becoming a player in the green energy sector.
The Australian-based global engineering solutions provider is playing a key role in the transition from fossil fuels to renewable energy.
Known for its expertise in delivering large-scale engineering and construction projects, Worley is focusing its efforts on sustainable and green projects.
“As a proud Australian company, Worley stands as the world’s largest provider of engineering, project, and asset solutions in our sectors,” declared Worley’s chairman, John Grill, at the company’s AGM last week.
“Our company has matured into a critical asset for the Australian national interest, and is positioned across the world as a leader supporting the global shift toward a lower-carbon future.”
Worley has set an ambitious goal to generate 75% of its revenue from sustainability-related projects by FY26.
In FY24, that figure was already at 52%, which Goldman said is impressive given the global challenges around energy and climate.
The company has also reported that the number of contract wins in its sustainability-related pipeline in Q1 FY25 was at 1048 wins, which is higher than last quarter (840 in Q4 FY24), and on the pcp (775 in Q1 FY24).
With the rise of electric vehicles, battery storage, and the growing need for renewable energy sources like solar and wind, Goldman believes Worley will continue to capture significant growth in the coming years.
Green projects
Worley is involved in several high-profile projects across various sectors.
For instance, the company is set to begin the Front-End Engineering Design (FEED) phase for a $7 billion green ammonia project in Morocco’s Tarfaya region. The project will produce one million tonnes of green ammonia annually by 2027, powered entirely by renewable energy.
In Germany, Worley is collaborating with Shell to transform the Energy and Chemicals Park Rheinland, converting part of the facility to produce renewable hydrogen and base oils.
In the US, Worley has been awarded the FEED contract for Cerilon’s gas-to-liquids project in North Dakota, which will be the first of its kind globally to incorporate commercial-scale carbon capture and sequestration.
And in Australia, Worley has won the FEED contract for ABEL Energy’s $1.7 billion green hydrogen and methanol project at Bell Bay in Tasmania.
The project will use renewable energy to produce green hydrogen, which will then be combined with carbon from biomass to create green methanol, primarily for use in the shipping industry.
Goldman thinks Worley is undervalued
Despite Worley’s leading role in the green energy space, Goldman believes the stock is undervalued relative to its market potential.
At the moment, most sustainable funds have an underweight position in Worley, which means that many investors are still overlooking this green energy leader.
According to GS analysts, Worley’s shares are trading at a discount to the broader market, which could present an opportunity for long-term investors to get in at a lower price.
The reason for this undervaluation?
Goldman said it partly stems from the market’s short-term focus on traditional energy investments.
The global energy landscape is in a period of transition, and companies like Worley that are pushing the envelope on sustainability might not see the full value of their efforts realised until later.
However, as the world’s energy policies continue to shift and investors start paying more attention to sustainable investing, Worley’s market position could dramatically improve, Goldman said.
What does the future hold?
As of FY24, 56% of Worley’s project backlog was sustainability-related, and this number is expected to grow in the coming years, according to Goldman.
Worley’s CEO Chris Ashton has pointed out that while the pace of investment in green technologies may slow in the short term, the long-term growth opportunities are undeniable.
At last week’s AGM, Ashton reiterated that the company is very focused on building a future-ready business by investing in emerging sustainability markets.
“The global commitment to net zero has created a prolonged cyclical upturn of activity in all our key sectors of energy, chemicals and resources,” he said.
“While there are expected peaks and troughs as the transition is delivered over time, the overall trend looks positive.
“Even in a challenging macro-environment, global net zero commitments remain in place, and many customers are navigating a pathway to net zero.”
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.
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