Bingo’s Shares Slipped Over 45% On ASX Post Release Of Market Update And FY19 Outlook

Bingo Industries Limited (ASX: BIN) provides complete environmental and waste management solutions across the waste management supply chain. The company keeps on continual innovation and development of technology, services and practices as part of its commitment to developing leading waste management and environmental solutions.

On 18 February 2019, Bingo Industries Limited has provided outlook and market update for FY19. It expects its underlying EBITDA for the full year ending 30 June 2019 to be in-line with the previous year. Following this release, the share price of the company decreased by 45.565% on 18 February 2019 (AEST 3:42 PM).

As per the release, volumes in the Building & Demolition (B&D) collections business of the company were above the previous corresponding period but have not grown as much as the initial forecast. Additionally, competition in the B&D collections market has put downward pressure on pricing which might be impacted its margins. The company experienced a faster than anticipated softening in multi-dwelling residential construction activity across its key markets in NSW and Victoria.

The forecasted price rise of the company was delayed coinciding with the introduction of the Queensland waste levy, to ensure the customers of the company received a single price increase during the year. Due to the delay in the introduction of the Queensland levy, together with the softening residential market, the company has decided not to implement a price increase until FY20. On the back of this, the company will absorb increased costs for the whole of FY19, including tipping and transport, that would ordinarily be covered in the price rise.

As previously advised, the company has had several recycling facilities in NSW and Victoria offline for redevelopment, which is a part of its network expansion program. A further review was conducted relating to the network configuration plan based on the proposed acquisition of DADI and pending regulatory reforms, including comprehensive new fire regulations. This has resulted in a change in scope to certain projects, impacting timing.

The reconfiguration will deliver enhanced operational efficiencies and lower the overall capital program by $25 million to $30 million, an approximate saving of 15%-20% on the original budget. To achieve this, the reopening of the company’s Mortdale facility will occur in H1 FY20, while the requirement to redevelop its Minto facility is currently under review. The Patons Lane redevelopment of the company is on track, and its West Melbourne facility will start operations in April 2019.

The combination of the above factors will result in a reduction to its full year guidance for the financial period ending 30 June 2019. On the price-performance front, the stock of Bingo Industries last traded at $1.252 with a market capitalisation of $1.34 billion. The stock has generated a YTD return of 26.03% and posted negative returns of 14.75% and 1.29% over the last six months and three months period respectively, however over the past one month the return has been 13.30%. It has a 52-week high price of $3.270 and a 52-week low price of $1.20 with an average trading volume of ~2.10 million. The stock is trading at a PE multiple of 23.0x with an EPS of AUD 0.100.


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