Last close As at 05/08/2026
GBP8.68
▲ 0.09 (0.01%)
Market capitalisation
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Research: Industrials
Renewi’s H122 pre-close statement contained commentary on firm trading in the Commercial division, slightly tempered by slower acceleration in activity at ATM, but nevertheless pointing to materially higher management expectations for FY22 as a whole. An improving rate of earnings progress and healthy cash flows are two clear positives for investors.
Written by
Renewi |
Further earnings momentum |
H122 pre-close update |
Industrial support services |
8 October 2021 |
Share price performance
Business description
Next events
Analyst
Renewi is a research client of Edison Investment Research Limited |
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Renewi’s H122 pre-close statement contained commentary on firm trading in the Commercial division, slightly tempered by slower acceleration in activity at ATM, but nevertheless pointing to materially higher management expectations for FY22 as a whole. An improving rate of earnings progress and healthy cash flows are two clear positives for investors.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/20 |
1,775.4 |
54.3 |
53.6 |
5.2 |
15.1 |
0.6 |
03/21 |
1,693.6 |
47.1 |
44.7 |
0.0 |
18.1 |
N/A |
03/22e |
1,805.8 |
68.1 |
64.1 |
0.0 |
12.6 |
N/A |
03/23e |
1,853.1 |
78.2 |
73.6 |
17.6 |
10.9 |
2.2 |
Note: *PBT and EPS (fully diluted) are normalised, excluding pension net finance costs, amortisation of acquired intangibles and exceptional items. FY20- are on an IFRS 16 basis.
Positive Commercial volumes and pricing
Core volume growth in the first five months of H122 (Netherlands +2%, Belgium +15% y-o-y) means Commercial activity is now only slightly below pre COVID-19 levels both countries. Healthy construction waste, a recovering hospitality sector and sustained strength in recyclate prices is driving improved performance compared to earlier expectations. ATM (soil/water/chemical treatment) is also progressing but at a slower rate than anticipated; thermally treated soil is being placed into the market at contracted rates but inbound soil volumes are behind (owing to slower project starts and approvals). Elsewhere, Coolrec (fridge and small electrical item recycling) is the pick of the Specialities division due to a combination of rising volumes and higher metals prices. Rising profits coupled with controlled working capital and replacement capex lines means that core net debt:EBITDA is now below 2.0x at H122 (versus 2.2x EBITDA at the year-end FY21).
Estimates raised again
The Commercial division dominates group profitability and is driving up management expectations; based on an improved mix our earnings estimates have increased by c 20% for FY22 and 8–10% in FY23 and FY24. Renewi is committed to spending €80m+ in its innovation programme, targeting €20m incremental EBIT by the end of FY25 and we expect to hear more on these areas at a forthcoming capital markets event on 12 October. The other two strategic workstreams (ie digitising/improving business efficiency and ATM’s recovery) are also progressing.
Valuation: Organic and secular growth play
Having risen by more than 60% ytd, Renewi’s share price has regained to levels last seen three years ago. We have upgraded earnings a number of times based on reported trading since the beginning of the year and feel this has been the primary short term share price driver. It is relatively early days in the latest strategic phase which is designed to deliver a material and sustainable uplift in group profitability additionally underpinned by what should be secular growth in recycling activity levels. The current-year valuation multiples (P/E 12.6x and EV/EBITDA adjusted for pensions cash 5.6x) still do not suggest the rating is fully aligned with Renewi’s prospects in our view.
Exhibit 1: Financial summary
m's |
2018 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
|||
March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|
|
Sterling |
Euros |
Euros |
Euros |
Euros |
Euros |
Euros |
Euros |
|
Revenue |
|
|
1,565.7 |
1,760.3 |
1,780.7 |
1,775.4 |
1,693.6 |
1,805.8 |
1,853.1 |
1,918.3 |
|
Cost of Sales |
|
|
(1,276.9) |
(1,419.2) |
(1,470.4) |
(1,467.5) |
(1,408.5) |
(1,497.3) |
(1,531.8) |
(1,581.0) |
|
Gross Profit |
|
|
288.8 |
341.1 |
310.3 |
307.9 |
285.1 |
308.5 |
321.2 |
337.3 |
|
EBITDA |
|
|
156.9 |
176.3 |
179.7 |
167.1 |
159.8 |
183.4 |
195.0 |
203.4 |
|
Operating Profit (before GW and except.) |
|
69.1 |
82.5 |
85.5 |
87.6 |
73.0 |
95.1 |
105.2 |
112.1 |
||
Net Interest |
|
|
(14.2) |
(15.0) |
(14.4) |
(18.5) |
(14.0) |
(13.5) |
(13.5) |
(13.5) |
|
Other Finance |
|
|
(5.1) |
(7.1) |
(8.4) |
(15.7) |
(13.5) |
(13.5) |
(13.5) |
(13.5) |
|
JV/Associates |
|
|
2.3 |
2.6 |
0.4 |
0.9 |
1.6 |
0.0 |
0.0 |
0.0 |
|
Intangible Amortisation |
|
|
(5.8) |
(6.7) |
(6.4) |
(6.4) |
(3.3) |
(3.3) |
(3.3) |
(3.3) |
|
Non Trading & Exceptional Items |
|
|
(95.7) |
(108.4) |
(145.1) |
(107.1) |
(25.9) |
(10.0) |
(12.0) |
(6.0) |
|
Profit Before Tax (Edison norm) |
|
|
52.1 |
63.0 |
63.1 |
54.3 |
47.1 |
68.1 |
78.2 |
85.1 |
|
Pension net finance costs |
|
|
(0.6) |
(0.7) |
(0.6) |
(0.2) |
0.3 |
0.0 |
0.0 |
0.0 |
|
Profit Before Tax (Renewi norm) |
|
|
51.5 |
62.3 |
62.5 |
54.1 |
47.4 |
68.1 |
78.2 |
85.1 |
|
Profit Before Tax (statutory) |
|
|
(50.0) |
(52.8) |
(89.0) |
(59.4) |
18.2 |
54.8 |
62.9 |
75.8 |
|
Tax - headline |
|
|
2.6 |
1.4 |
12.4 |
(1.1) |
(7.2) |
(16.3) |
(18.8) |
(20.4) |
|
Profit After Tax (norm) |
|
|
39.1 |
47.2 |
47.5 |
41.0 |
35.5 |
51.8 |
59.4 |
64.7 |
|
Profit After Tax |
|
|
(47.4) |
(51.5) |
(76.6) |
(60.5) |
11.0 |
38.5 |
44.1 |
55.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding (m) |
|
80.0 |
80.0 |
79.7 |
79.5 |
79.5 |
8.0 |
8.0 |
8.0 |
||
EPS - Edison norm (p/c) FD |
|
|
48.6 |
58.7 |
60.3 |
53.6 |
44.7 |
64.1 |
73.6 |
80.2 |
|
EPS - Renewi norm (p/c) FD |
|
|
48.0 |
54.0 |
59.7 |
53.5 |
45.0 |
64.1 |
73.6 |
80.2 |
|
EPS - (p/c) |
|
|
(59.1) |
(67.8) |
(116.5) |
(98.0) |
13.9 |
47.3 |
54.3 |
68.5 |
|
Dividend per share (p/c) |
|
|
30.5 |
34.6 |
16.8 |
5.2 |
0.0 |
0.0 |
17.6 |
20.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (%) |
|
|
18.4 |
19.4 |
17.4 |
17.3 |
16.8 |
17.1 |
17.3 |
17.6 |
|
EBITDA Margin (%) |
|
|
10.0 |
10.0 |
10.1 |
9.4 |
9.4 |
10.2 |
10.5 |
10.6 |
|
Operating Margin (before GW and except.) (%) |
|
4.4 |
4.7 |
4.8 |
4.9 |
4.3 |
5.3 |
5.7 |
5.8 |
||
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets |
|
|
1,456.3 |
1,669.2 |
1,439.6 |
1,616.8 |
1,617.8 |
1,641.8 |
1,681.0 |
1,718.7 |
|
Intangible Assets |
|
|
606.3 |
699.3 |
605.6 |
610.1 |
602.2 |
594.8 |
587.4 |
580.0 |
|
Tangible Assets (inc RoU assets) |
|
|
623.0 |
710.8 |
629.1 |
790.9 |
794.5 |
832.6 |
879.2 |
924.3 |
|
Investments |
|
|
227.0 |
259.1 |
204.9 |
215.8 |
221.1 |
214.4 |
214.4 |
214.4 |
|
Current Assets |
|
|
366.2 |
418.0 |
533.3 |
503.3 |
338.4 |
331.1 |
327.8 |
328.5 |
|
Stocks |
|
|
23.3 |
26.6 |
26.0 |
20.7 |
20.6 |
21.9 |
22.4 |
23.1 |
|
Debtors |
|
|
279.0 |
318.4 |
456.9 |
288.1 |
266.3 |
279.2 |
286.0 |
294.7 |
|
Cash |
|
|
63.9 |
73.0 |
50.4 |
194.5 |
51.5 |
30.0 |
19.3 |
10.7 |
|
Current Liabilities |
|
|
(545.8) |
(631.0) |
(758.3) |
(635.2) |
(644.6) |
(642.1) |
(647.2) |
(653.5) |
|
Creditors |
|
|
(532.9) |
(616.3) |
(639.6) |
(618.4) |
(632.3) |
(629.8) |
(634.9) |
(641.2) |
|
Short term borrowings |
|
|
(12.9) |
(14.7) |
(118.7) |
(16.8) |
(12.3) |
(12.3) |
(12.3) |
(12.3) |
|
Long Term Liabilities |
|
|
(894.3) |
(1,019.9) |
(895.1) |
(1,249.6) |
(1,068.6) |
(1,049.3) |
(1,040.6) |
(1,031.8) |
|
Long term borrowings |
|
|
(489.7) |
(558.9) |
(483.7) |
(634.9) |
(382.8) |
(382.8) |
(402.8) |
(422.8) |
|
Other long term liabilities |
|
|
(404.6) |
(461.0) |
(411.4) |
(614.7) |
(685.8) |
(666.5) |
(637.8) |
(609.0) |
|
Net Assets |
|
|
382.4 |
436.3 |
319.5 |
235.3 |
243.1 |
281.5 |
320.9 |
361.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow |
|
|
128.4 |
143.6 |
86.8 |
167.8 |
258.2 |
175.7 |
183.7 |
197.9 |
|
Net Interest |
|
|
(16.9) |
(19.1) |
(17.7) |
(27.0) |
(20.6) |
(20.7) |
(20.7) |
(20.7) |
|
Tax |
|
|
(6.7) |
(7.6) |
(13.2) |
(10.1) |
(14.8) |
(13.8) |
(16.3) |
(18.8) |
|
Net Capex |
|
|
(81.2) |
(92.3) |
(99.4) |
(73.4) |
(62.3) |
(122.3) |
(132.3) |
(132.3) |
|
Acquisitions/disposals |
|
|
(4.1) |
(4.8) |
22.7 |
81.0 |
2.4 |
0.0 |
0.0 |
0.0 |
|
Equity Financing |
|
|
0.6 |
0.6 |
(2.7) |
0.6 |
0.4 |
0.0 |
0.0 |
0.0 |
|
Dividends |
|
|
(24.4) |
(27.6) |
(27.4) |
(8.6) |
0.0 |
0.0 |
(4.7) |
(14.4) |
|
Net Cash Flow |
|
|
(4.3) |
(7.3) |
(50.9) |
130.3 |
163.3 |
18.9 |
9.7 |
11.8 |
|
Opening core net debt/(cash) |
|
|
423.9 |
492.7 |
500.0 |
552.0 |
457.2 |
343.6 |
365.1 |
395.8 |
|
IFRS16 lease capital repayments |
|
|
0.0 |
0.0 |
0.0 |
(38.5) |
(40.4) |
(40.4) |
(40.4) |
(40.4) |
|
Other |
|
|
(10.5) |
(0.0) |
(1.1) |
3.0 |
(9.3) |
0.0 |
0.0 |
0.0 |
|
Closing core net debt/(cash) |
|
|
438.7 |
500.0 |
552.0 |
457.2 |
343.6 |
365.1 |
395.8 |
424.4 |
|
Closing PPP/PFI non-recourse net debt |
|
82.9 |
94.6 |
95.4 |
90.0 |
87.8 |
87.8 |
87.8 |
87.8 |
||
IFRS16 Lease finance |
|
|
|
|
|
202.7 |
247.8 |
249.9 |
252.0 |
254.1 |
|
|
Company data, Edison Investment Research. Note: *EPS for continuing businesses in FY20 was 51c and the 54c figure shown includes discontinued operations. Please note that the company’s shares underwent a 10:1 consolidation on 19 July 2021. |
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Research: Healthcare
ReNeuron has announced that the nine-patient Phase IIa (2m cell dose) extension study (halted in June after a presumed eye infection case) has fully restarted with five patients left to treat. Two patients are scheduled for treatment in October. The company expects to report some data by March 2022, which could potentially open the way to a crucial partnering deal. Full efficacy data at six months post-treatment should be available around the middle of 2022. Our valuation remains £190m.