Excerpts from analyst's report

Phillip Securities analyst: Richard Leow CFTe, FRM

What is the news? 
National Environment Agency (NEA) published waste and recycling statistics for 2015 last week. Key highlights were the growth in waste disposed and growth in recycling. (Source

More waste generated in 2015. The amount of waste generated in 2015 increased to 7.67mn tonnes, a +2.1% increase over 2014. NEA commented that this was in tandem with population growth and higher affluence. 

Overall recycling rate was up too. The amount of waste recycled grew +4.0% to 4.65mn tonnes in 2015. In terms of proportion of total waste, waste recycled had a modest increase to 61% from 60%. 

recycle0Photo: Company


What do we think of this?
Demand drivers we had previously identified are spot on. We had previously identified on Page 4 of our trading note (9 September 2014), three drivers of higher waste and recycling: (1) population growth, (2) economic growth and (3) environmental initiatives.

We said that there is a "clear trend of increasing waste generated in Singapore in tandem with population and economic growth", with economic growth "leading to higher incomes, higher propensity for consumer discretionary spending (upgrading consumer goods to replace existing goods), resulting in more waste being generated".

Moreover, environmental initiatives have led to greater environmental-awareness and consequently recycling of waste is gaining traction.

RichardLeow2.15Richard Leow, Phillip Securities analyst.Maintain "Buy" on the defensive business model; unchanged target price of S$0.58
800 Super is clearly well-positioned to capitalise on the above-mentioned trends, as it provides Waste Management & Recycling services. It is one of four licenced Public Waste Collectors (PWCs) appointed by NEA to provide public waste collection services.

800 Super already has a Material Recovery Facility (MRF) in place, and is in the process of developing a second MRF to cater specifically to horticultural waste.

Company Price (S$) Mkt Cap (S$m) Trailing P/E Trailing P/B Trailing EV/EBITDA ROA (%) ROE (%)
800 Super 0.485 77.8 4.3 1.3 4.9 15.1 34.8
Colex 0.350 39.8 8.1 1.5 4.3 13.2 20.0

Full report here.


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