BINGO Industries Limited

BIN Details

Change in Director’s Holdings: BINGO Industries Limited (ASX: BIN) is in the business of waste management. The market capitalisation of the company stood at ~A$1.48 Bn as on 6^th August 2019. Recently, the company, via a release announced that Daniel Girgis had made a change in his holding by acquiring 55,555 ordinary shares. The company stated that The Capital Group Companies, Inc. had made a change to its substantial holding in BINGO Industries with the voting power of 6.2474% in comparison to the previous voting power of 5.2195%. Recently, the company published its investor presentation, wherein it primarily communicated about its integration with DADI. The company stated that DADI (or Dial a Dump Industries) is a provider of fully integrated recycling and waste management services in New South Wales having operations across the waste value chain from collections, to recycling, landfill, and recycled product sales. The acquisition of DADI was formally wrapped up in March 2019.

Additionally, it was stated that the integration of two businesses is well underway and it is anticipated that the integration will take up to 2 years. The primary objectives behind the integration of DADI is to:

• Ensure that all sites meet ISO standards
• Retain and engage key personnel
• Determine future-state operating model
• Internalise 100% of non-putrescible volumes within the network
• Deliver annualised cost synergies of $15 million within 2 years.

The following picture provides a broader view of network capacity expansion of the company:


Network Capacity Expansion (Source: Company Reports)

What to Expect: The company is having growth opportunities for the diversification into MSW and C&I putrescible waste streams. BINGO Industries Limited is creating a safe environment and it is committed to being relentless in its pursuit of zero harm for its people. The company’s underlying business remains on track to achieve its revised FY19 EBITDA guidance. The company stated that the headwinds in multi-dwelling residential construction have continued in 2H FY19 and are anticipated to continue across the financial year 2020. Additionally, reduction in total construction volume in this area is anticipated to be partially offset in the near term by work in hand secured from infrastructure projects. With respect to geographic expansion, it is planning to consolidate and optimise Victorian footprint through leveraging national accounts. It is planning 100% internalisation of Victorian non-putrescible volumes. The company is planning to maintain and grow leading position in B&D collections and post-collections and to grow C&I market share in New South Wales and Victoria.

Stock Recommendation: The company reported a gross margin and EBITDA margin of 52.2% and 21.8% in 1H FY19 against the industry median of 39.0% and 20.2%, respectively.  The net margin of the company stood at 7.6% in 1H FY19 as compared to the industry median of 11.3%.  The current ratio of BINGO stood at 2.33x in 1H FY19 against the industry median of 1.31x, which represents that BIN is well-positioned to address its short-term obligations. Also, respectable liquidity levels might support the company is making deployments towards strategic business objectives. It posted an asset to equity ratio of 1.14x in 1H FY19 in comparison to the industry median of 2.44x.

Coming to the stock’s past performance, it witnessed a rise of 26.70% in the time span of three months. However, in the time period of one month, the stock has produced negative returns of -5.11%. Hence, considering the above-stated facts and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$2.330 per share (up 4.484% on 6^th August 2019).


BIN Daily Technical Chart (Source: Thomson Reuters)

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