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BINGO Industries Limited, solid result in a challenging market

Team Veye | 02 Mar 2021 ASX - BIN
BINGO Industries Limited, solid result in a challenging market

BINGO Industries Limited (ASX: BIN)

Bingo Industries Limited (ASX: BIN) on 22 February 2021 reported its financial results for 1HFY21.

BIN has delivered a solid result in a challenging operating environment. The strong result was driven by its five-year strategy of weighting the business towards defensive infrastructure assets. 85% of the Group’s earnings for the period came from its Post-Collections operations. BIN expects to benefit from the strong infrastructure pipelines in NSW and VIC, before a recovery in the residential and non-residential markets over the medium term. C&I volumes are also set to increase with reduced restrictions and the wider workforce moving back to offices in the short term.

(Chart source: TradingView)

Financial Highlights:

  • Revenue was down 3.1% against the PCP to $241.1 million.
  • Collections revenue decreased by 19.3% to $98.5 million, largely due to the challenging COVID-19 environment across both B&D and C&I waste streams.
  • Collections Underlying EBITDA was $15.3 million, down 38.1% against the PCP of $24.7 million. Collections EBITDA margin decreased by 480 basis points to 15.5% driven by a decline in B&D cube rates together with reduced C&I activity in NSW and VIC, as a result of challenging market conditions.
  • Post-Collections revenue increased by 5.0% from $162.7 million to $170.9 million, driven by increased volumes in line with BINGO’s network capacity uplift and focus on attracting volumes in a contracting market.
  • Post-Collections Underlying EBITDA was down by 0.2% from $55.6 million to $55.5 million. Underlying EBITDA margin contracted by 170 basis points to 32.5%, underpinned by reduced pricing across landfill and recycling facilities.

(Graphic Source – Company Reports)

  • Other Underlying revenue was down by 21.4% to $13.7 million from $17.4 million in the PCP.
  • TORO revenue was down slightly to $12.5 million, down 10.1% against the PCP. Pleasingly, TORO external sales represented 65% of revenue and the business currently has a record level of work in hand at circa $5 million.
  • Underlying EBITDA was down by 20.5% against the PCP to  $65.2 million
  •  Underlying EBITDA margin of 27.0% down 600 bps against the PCP
  • Achieved Cash conversion of 98.5% and generated positive organic free cash flow across the 2020 calendar year (CY20) despite COVID-19 impacts on the business.
  • Net Debt reduced from $321.1 million to $317.4 million over the past 12 months
  • Refinanced $500 million Syndicated Debt Facility providing increased financial flexibility and extending the facility tenor out to October 2024.
  • The Board has declared an interim dividend of 1.5 cents per share
  • BINGO expected Group EBITDA margin to decline in FY21 by approximately 200-300 bps, before rebounding to its longer-term target of 30% (Data Source – Company Reports)

 

Veye’s Take

BINGO expects its state of the art Materials Processing Facility 2 (MPC 2) to be commissioned in late 2H FY21. It will be the largest most sophisticated B&D and C&I waste processing facility in Australia and is expected to further improve BINGO’s industry leading recovery rate in NSW. The stock after remaining in an uptrend witnessed minor dips. The stock has taken strong support at $3.01 and gaining back the upside momentum. RSI and MACD already in positive territory supporting the upside price pattern. It faces some resistance between $3.40-$3.60 area, crossing which it can have the potential of growing strength in the near to medium term. The Latest "Buy" on BINGO Industries Limited” at the price of $1.625 was given on 14 March 2019. It has already grown by more than 97% since then. Veye maintains a "Hold" on “BINGO Industries Limited” at the current price of $3.21

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