Bingo Industries Limited

Collection Revenue up 20.7% in FY19: Bingo Industries Limited (ASX: BIN) operates in recycling and waste management solutions. The company provides services to building and demolition (B&D) and commercial and industrial (C&I). The company has waste streams with capabilities across waste collections, processing, separation and recycling components of the waste value chain.

Recently, the company updated that two its directors, Michael Coleman and Barry Buffier have acquired 15,000 shares and 20,000 shares for the consideration of $33,949.50 and $46,811.66, respectively on 23 August 2019.

FY19 Financial Highlights for the period ended 30 June 2019: Bingo Industries Limited posted net revenue at $402.2 million, up 32.4% y-o-y. Underlying EBITDA at $106.1 million in FY19 saw a growth of 13.2% on pcp. Underlying EBITDA margin of the company stood lower at ~26.4% as compared to ~30.8% during FY18. The company reported PAT at $22.3 million, down 41.4% on FY18. The company reported a higher operating free cash flow of $116.5 million, up 31% on FY18. Net debt stood at $275.8 million as on 30 June 2019, higher by 102% on FY18. During the year, the company successfully completed development programs with West Melbourne Recycling Centre and Patons Lane Recycling Centre and Landfill online.  The acquisition and development of DADI resulted a total network capacity of 3.4 million tons per annum for the company. Collections revenue was higher by 20.7% on y-o-y at $213.5 million, aided by a full year contribution of the Victorian business and a partial year contribution from DADI collections revenue.


FY19 Financial Highlights (Source: Company Reports)

The Board has declared a fully franked dividend of 2.0 cents per ordinary share to be payable on 30 September 2019.

Outlook: The management expects a solid growth in FY20, driven by a full year contribution from Patons Lane Recycling Centre and Landfill, West Melbourne Recycling Centre and DADI, together along with subsidiaries. The management also cited that the higher NSW pricing is likely to benefit the company in FY20. The management expects the divestment of Banksmeadow to take place in September 2019 and is likely to contribute approximately $10 million in company’s EBITDA for FY20.

Stock Recommendation: The Stock of BIN is trading at $2.260 with a market capitalization of $1.54 billion. The 52-weeks trading range for the stock stands at $1.170- $3.260. The stock has delivered robust returns of ~22.51% and ~36.05% in last three months and six months, respectively. FY19 was highlighted by a remarkable growth in top-line and bottom-line. Going forward, the company is likely to benefited from recent acquisitions. Considering the aforesaid factors, we recommend a 'Buy' rating on the stock at the current market price of $2.260, down 3.419% on 6 September 2019. 

Myer Holdings Limited

Robust Digital Growth outpaces tepid consumer sentiment: Myer Holdings Limited (ASX: MYR) operates department stores across Australia. Recently, with a market update, BIN notified that one of its directors, John King has acquired 100,000 shares for the consideration of $64,000.

FY19 Financial Highlights for the period ended 30 June 2019: The company reported FY19 revenue at $2,991.8 million, down 3.5% on y-o-y while NPAT at $33.2 million witnessed a growth of 2.2% growth. EBITDA during the year stood higher at 7.2% to $160.1 million on y-o-y. Due to weak consumer sentiment, MYR posted subdued sales from Comparable store, down 1.3% excluding sales in Apple products. On the other hand, revenue from online stood robust at $262.3 million, an increase of 25.6% on y-o-y. Digital sales during FY19 came in at $292.1 million, up 21.9%pcp, representing 9.8% of total sales in FY19. Operating cash flow came in at $138 million as on 30 June 2019, higher by $8 million on FY18. Cost of doing business (CODB) witnessed an improvement by 3.1% to $1,002.4 million, primarily aided by improved efficiencies both in stores and Support Office, cost savings achieved in IT, occupancy and marketing. MYR reported a lower Capex of $45 million during FY19 due to a heightened focus on return hurdles, particularly in an environment of subdued consumer sentiment during the second half. Finance costs stood at $5.56 million, higher than $3.97 million in FY18, primarily due to higher funding costs relating to the refinancing. However, this was partly offset by reduction in debt levels from positive cash flow.  
 

FY19 Financial Highlights (Source: Company Reports)

Outlook:  The management is expectinga challenging macro environment and subdued consumer sentiment to be continued during FY20. However, the company has identified several opportunities to improve efficiency across logistics and non-customer facing segments. The company will be further investing in online business with key improvements like introduction before of Christmas, renewed focus on developing customer value and business integration of MYER one.
 

Stock Recommendation: The stock of MYR is trading at $0.615 with a market capitalization of $517.41 million. Currently, the stock is inching towards the upper band of its 52-week trading range at $0.360 to $0.740. The stock delivered 23.53% and -4.55% returns in the last one month and three months, respectively. The stock is available at an EV/ EBITDA multiple of 2.7x on TTM basis as compared to the industry median of 7.3x. Despite tepid consumer sentiment, the business is expected to deliver improved earnings driven by operational efficiency, better digital growth and new marketing strategies. Hence, considering the aforesaid factors, valuations and current trading levels, we recommend a 'Hold' rating on the stock at the current market price $0.615, down 2.381% as on 06 September 2019.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.