800 Super

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#61
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.
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#62
133.65/15.5 = 8.62 million per year.

Award of Contract by Public Utilities Board

800 Super Holdings Limited wishes to announce that its wholly-owned subsidiary, 800 Super Waste Management Pte Ltd ("800 Super Waste"), had been awarded a contract by the Public Utilities Board on 27 October 2016 for the treatment and disposal of sludge from water reclamation plants at a contract value of S$133.65 million (the "Contract").
The Contract shall be for a period of fifteen and a half years from 7 November 2016 to 6 May 2032, and is not expected to have any material impact on the earnings per share or the net tangible assets per share of the Group for the financial year ending 30 June 2017.
Specuvestor: Asset - Business - Structure.
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#63
just curious to ask how much do you think management should be reasonably paid? The two founders were paid above 250k each in FY2011 with net profit 4.6m, now they were paid above 1.25m each in FY2016 with 16.7m net profit. This is one reason I didn't buy in 2012 when it was trading around 14cents, but must say at lease they give good dividends to OPMI, unlike some other small caps owners just keep money for themselves with pathetic dividend payouts.
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#64
^^ Interesting... the amounts given to the Lees are equivalent to amounts given to OPMI as dividends Smile The remuneration committee is generous.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#65
800 Super recently released a good set of quarterly results for 1QFY17.

http://infopub.sgx.com/FileOpen/800%20Su...eID=428748

Growth continues as PBT increased from $4m in the previous quarter to $5.2m this quarter. Manpower costs continue to edge up, but depressed diesel prices also continued to reduce transport and disposal costs. The company also seems to started reducing its use of leverage -- from $46m to $44m -- with the completion of its WTE coming up in 9 months time. With regards to valuation, the market still has yet to price in the potential earnings of the WTE plant.

http://www.channelnewsasia.com/news/sing...68218.html

The NEA reviews the public waste collection fees every two years. For 2017, NEA has decided to increase the fees from $7.49 to $8.25; which is about 10%. This should help 800 Super alleviate its cost pressures and allow for margins to be maintained; we should see higher profits in 2017 as a result of this. As one may deduce, Public Waste Collectors such as 800Super enjoys a somewhat oliogopolistic advantage, since there can be no new entrants until the next tender (in 2021 for the Bishan-AMK area which they service), and the regulator routinely adjust prices to allow for profits.

As for management compensation, my principle is that management should be rewarded according to the value they add to the company and shareholders. If increasing their salary from $250k to $1,000k can increase my dividends from 1ct to 2.5cts, and share price from 14cts to 85cts, i would gladly do so.
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#66
Seems like the increased net profit for this quarter (and hopefully going forward) will translate to higher future dividends (even with the 30% payout ratio) and is driving the stock up today, although 90c implies a 2.92% dividend yield for the last twelve months which is quite low for a utility-type stock. Hopefully the WTE plant will see both increased revenues and also lower costs through reducing disposal costs for 800 Super.
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#67
800 Super recently released their quarterly results for 2QFY17:

http://infopub.sgx.com/FileOpen/Q2%20201...eID=438723

The usual growth story continues.

A surprising development where interim dividend of 1ct was declared for the first time. Perhaps we can look forward to another year of growth in total dividends for FY17.
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#68
Presently, the sector of pasir-ris and tampines is managed by Veolia, while bedok is managed by Sembcorp Industries. The contract for these two sectors, which began in 2011, will end in July/November 2018. When the contracts end, these two sectors will be consolidated. NEA is expected to call for the bidding of the consolidated sector in the second half of this year.

http://www.nea.gov.sg/energy-waste/waste-management
http://www.sembcorp.com/en/media/2196/68...5jul11.pdf

In January early this year, NEA has called for interested operators to be pre-qualified. The following operators have responded:

800 SUPER WASTE MANAGEMENT PTE LTD
ALBA GROUP PLC & CO. KG
AVERDA INTERNATIONAL LIMITED
BNL WASTE MANAGEMENT PTE. LTD.
CHIANG KIONG ENVIRONMENTAL PTE. LTD.
CHYE THIAM MAINTENANCE PTE LTD
COLEX ENVIRONMENTAL PTE. LTD.
ECO Special Waste Management Pte Ltd
RAMKY CLEANTECH SERVICES PTE. LTD.
SEMBWASTE PTE. LTD.
SWM ENVIRONMENT SDN. BHD.
VEOLIA ES SINGAPORE PTE. LTD.
WAH & HUA PTE LTD

I estimate the contract value for these 2 sectors to be about $350m over 7 years. It should be awarded sometime early next year. However, I'm not optimistic about 800 Super's chances. I think the incumbent operators will be able to bid more aggressively given the efficiency (hence lower cost) afforded by their operational experience.
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#69
800 Super recently released their quarterly results for 3QFY17, which shows its core operations stabilizing:

http://infopub.sgx.com/FileOpen/Q3%20201...eID=453497

Earnings for last twelve months totaled $18.5m, with net margins at 11.78%:
3Q17: $6.2m (15.77%)
2Q17: $3.6m (9.22%)
1Q17: $4.5m (11.42%)
4Q16: $4.2m (10.74%)

At last traded price of $1.375 (market cap $245m), this give us a last twelve months p/e of 13.24. Profit for FY17 should be about this amount as well. Not much has changes in its core business; revenue remains flat.
Once its facilities at Tuas South (WTE, MRF, sludge treatment) are complete, capex should be reduced, loans paid down, and dividends increased. When it is no longer expanding, it could pay out most of its earnings as dividends, like most utilities. But it will take about 1 year to complete its facilities and another 3 years to pay down loans.

Looking forward to some contribution from the WTE operations, and hopefully a 1 cent dividend, in the next quarterly.
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#70
There has been several incidents of fire involving waste management plants occurring recently in the same vicinity:

23 February 2017, 23 Tuas View Circuit, Eco Special Waste Management

http://www.channelnewsasia.com/news/sing...as-7608800

21 March 2017, Tanjong Kling in Jurong, NSL OilChem

http://www.channelnewsasia.com/news/sing...-r-8572646

7 June 2017, 6 Tuas South Street 8, Greenway Environmental

http://www.channelnewsasia.com/news/sing...nt-8925922

I'm not sure what to make of this, if any at all. Something up with waste management plants that is causing the fire? Incidentally, 800 Super's new plant is located just next to Greenway Environmental.
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