Homepage
PR Newswire
25-08-2016, 09:56 PM
FY2016 results has been released and can be found here:
http://infopub.sgx.com/FileOpen/FY2016%2...eID=418842
1) The core business has been going strong. FY profits has increased by 37%, from $12.2m to $16.7m, if we exclude the one-off gain of property disposal in 2015. Ironically, this is probably due to the slowing economy, which has brought its costs within manageable levels. The lower price of fuel is one of them.
2) The debt remains large at $46m. Part of these debt acquired over the years were used to finance their purchase of new trucks and containers land, to service their increasing business. But most of it was used to finance their acquisition of land at Tuas for $16m (completed in Oct 2012) for the purpose of constructing a materials recovery facility and biomass waste-to-energy plant for $31m (expected completion in 2H 2017). Adding them up, this project which has spanned 4 years cost $47m. This is more than their market cap of $40m when they first IPO-ed in 2011.
But the growth of the debt has slowed, and may perhaps not grow much more, since more than 90% of the cost of the waste-to-energy plant has been committed.
Borrowings History
2011: $6m
2012: $6m
2013: $20m
2014: $25m
2015: $43m
2016: $46m
3) The company seems confident of being able to service the loan, as dividends has increased by 25%, from $0.02 to $0.025. Since listing, the company has been consistent and generous with sharing its profits.
Dividends History
2011: 0.55 cent
2012: 1 cent
2013: 1 cent
2014: 1 cent
2015: 2 cent
2016: 2.25 cent
4) Looking back at the years since its IPO, growth of the core business' profitability has been stable and continuous:
Core Profit History
2008: $2.2m
2009: $3.4m
2010: $5.2m
2011: $4.6m
2012: $5.9m
2013: $5.7m
2014: $8.9m
2015: $12.2m
2016: $16.7m
Much of the company's present success is due to its Public Waste Collection license, of which there are only four. Had this opportunity gone to one of its competitors, it would not have enjoyed the huge contracts awarded by the government, which allowed it to grow to achieve economies of scale and offer more competitive pricing. Based on today's closing price of $0.72, the market is pricing 800 Super at 7.8x earnings, which i think is fair.
5) The market, however, has not priced in the potential growth which may come from the $47m materials recovery facility and biomass waste-to-energy plant which they spent the last 4 years planning for. The expected outcome from the WTE plant is greater savings on disposal charges and hence margin expansion. A 10% annual return will add $4.7m to its earning. But this is speculation. Since the project may only be complete 2H 2017, the full extent of the project's success (or otherwise) will only be seen 2 years from now. If they succeed in this, they will be the only public waste collector - apart from sembcorp - with the ability to incinerate their own waste.
http://infopub.sgx.com/FileOpen/FY2016%2...eID=418842
1) The core business has been going strong. FY profits has increased by 37%, from $12.2m to $16.7m, if we exclude the one-off gain of property disposal in 2015. Ironically, this is probably due to the slowing economy, which has brought its costs within manageable levels. The lower price of fuel is one of them.
2) The debt remains large at $46m. Part of these debt acquired over the years were used to finance their purchase of new trucks and containers land, to service their increasing business. But most of it was used to finance their acquisition of land at Tuas for $16m (completed in Oct 2012) for the purpose of constructing a materials recovery facility and biomass waste-to-energy plant for $31m (expected completion in 2H 2017). Adding them up, this project which has spanned 4 years cost $47m. This is more than their market cap of $40m when they first IPO-ed in 2011.
But the growth of the debt has slowed, and may perhaps not grow much more, since more than 90% of the cost of the waste-to-energy plant has been committed.
Borrowings History
2011: $6m
2012: $6m
2013: $20m
2014: $25m
2015: $43m
2016: $46m
3) The company seems confident of being able to service the loan, as dividends has increased by 25%, from $0.02 to $0.025. Since listing, the company has been consistent and generous with sharing its profits.
Dividends History
2011: 0.55 cent
2012: 1 cent
2013: 1 cent
2014: 1 cent
2015: 2 cent
2016: 2.25 cent
4) Looking back at the years since its IPO, growth of the core business' profitability has been stable and continuous:
Core Profit History
2008: $2.2m
2009: $3.4m
2010: $5.2m
2011: $4.6m
2012: $5.9m
2013: $5.7m
2014: $8.9m
2015: $12.2m
2016: $16.7m
Much of the company's present success is due to its Public Waste Collection license, of which there are only four. Had this opportunity gone to one of its competitors, it would not have enjoyed the huge contracts awarded by the government, which allowed it to grow to achieve economies of scale and offer more competitive pricing. Based on today's closing price of $0.72, the market is pricing 800 Super at 7.8x earnings, which i think is fair.
5) The market, however, has not priced in the potential growth which may come from the $47m materials recovery facility and biomass waste-to-energy plant which they spent the last 4 years planning for. The expected outcome from the WTE plant is greater savings on disposal charges and hence margin expansion. A 10% annual return will add $4.7m to its earning. But this is speculation. Since the project may only be complete 2H 2017, the full extent of the project's success (or otherwise) will only be seen 2 years from now. If they succeed in this, they will be the only public waste collector - apart from sembcorp - with the ability to incinerate their own waste.
The remuneration committee is generous.