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Augean

LN: AUG

£185.8m market cap

178.5p last close

Augean is a UK-based specialist waste management business. The business operates via two divisions: Treatment & Disposal and North Sea Services.

Investment summary

Augean has reorganised its business and now enjoys a strong competitive position in its key markets, allowing it to capture market growth and significantly improve profitability. The H119 results (adjusted EBITDA +71% to £14.2m) and recent trading update suggest this trend is set to continue (management stated that adjusted PBT would be ‘materially’ ahead of prevailing market consensus prior to the release of the update of £16.5m (now £18.4m)). Despite the recent strong share price performance, Augean’s market rating, even allowing for the tax liability with HMRC, appears modest (we estimate a valuation range of 175p–225p). We believe that Augean is in a financial position, should it choose to do so (with some borrowing), to pay off the HMRC liability (estimated £53m) making it a potential target in the ongoing consolidation of the UK waste industry.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 67.0 14.0 7.0 6.5 27.5 17.4
2018A 79.7 19.3 11.0 9.1 19.6 10.6
2019E 105.1 27.1 18.4 14.9 12.0 5.9
2020E 120.1 31.9 22.8 18.2 9.8 5.8
Industry outlook

A growing trend towards treatment, recovery and recycling in the waste hierarchy supports Augean’s specialist industry knowledge model.

Last updated on 14/11/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (£m) 30
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 51.3 89.9 292.3
Relative* 49.2 85.8 275.4
52-week high/low 182.0p/42.5p
*% relative to local index
Key management
Jim Meredith Chairman
Mark Fryer FD