Last close As at 06/08/2026
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Market capitalisation
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Research: Industrials
Year to date trading has been in line with management’s expectations, which are also unchanged for the year as a whole. Forward momentum in the important Commercial division is continuing and we see other noted actions as positive, logical moves. Investor sentiment appears to have waned since the FY19 results announcement, but the investment case is gradually strengthening in our view and from a single-digit P/E base.
Written by
Renewi |
Start to FY20 as expected |
AGM update |
Industrial support services |
11 July 2019 |
Share price performance
Business description
Next events
Analyst
Renewi is a research client of Edison Investment Research Limited |
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Year to date trading has been in line with management’s expectations, which are also unchanged for the year as a whole. Forward momentum in the important Commercial division is continuing and we see other noted actions as positive, logical moves. Investor sentiment appears to have waned since the FY19 results announcement, but the investment case is gradually strengthening in our view and from a single-digit P/E base.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/18 |
1,760.3 |
63.0 |
5.9 |
3.5 |
5.1 |
11.5 |
03/19 |
1,780.7 |
63.1 |
6.0 |
1.7 |
5.0 |
5.6 |
03/20e |
1,833.5 |
49.7 |
4.7 |
1.7 |
6.4 |
5.6 |
03/21e |
1,890.3 |
71.5 |
6.8 |
2.7 |
4.4 |
9.1 |
Note: *PBT and EPS (fully diluted) are normalised, excluding pension net finance costs, amortisation of acquired intangibles and exceptional items. Canada Municipal excluded.
Commercial progressing
Price increases put through in the Netherlands and Belgium at the beginning of the calendar year together with incremental merger synergy benefits are sustaining forward momentum in the Commercial division. Tight incinerator capacity in these markets is likely to be exacerbated by a partial six-month shutdown at AEB; as a consequence there may be potential wider pricing implications over this period but existing contractual positions provide Renewi operations with some protection against this. Elsewhere, there is no further material update at this stage on ATM (the ongoing Hazardous Waste business) from a regulatory perspective, but the development of alternative markets for separated/graded components of remediated soil are ongoing.
Portfolio re-shaping and Green financing
The proposed sale of Canada Municipal operations was previously announced (on 17 June, expected completion by the end of H120) as was the expected repayment of €100m retail bonds maturing this month, effectively replaced by Green funding alternatives (ie €25m Green EU private placement notes in December and a €75m Green Belgian bond more recently). During H120 to date, Renewi has also made two small strategic in-fill investments in complementary waste processors in the Netherlands (ie 100% of Rotie Organics and 32% of RetourMatras, values not disclosed), which have natural fits with existing operations. The Canadian disposal may be seen as the most significant by investors, but these actions collectively suggest a proactive business enhancement agenda is being implemented.
Valuation: Compressed rating, attractive yield
In the seven weeks since the FY19 results announcement (on 23 May), Renewi’s share price has slipped back by c 26%. We consider this to be at odds with the unchanged estimates messaging at that time (and retained now) and the positive steps being taken since. On our expected and unchanged trough earnings in the current year, the company is trading on a 6.4x P/E and a 4.5x EV/EBITDA (adjusted for pension cash). These metrics compress further to 4.1x and 3.7x by FY22 on our estimates). Moreover, the prospective FY20 dividend yield – based on an unchanged payout expectation – is now 5.6%.
Exhibit 1: Financial summary
m |
2014 |
2015 |
2016 |
2017 |
2018 |
2018 |
2019 |
2020e |
2021e |
2022e |
||||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||||
PROFIT & LOSS |
|
|
Sterling |
Sterling |
Sterling |
Sterling |
Sterling |
Euros |
Euros |
Euros |
Euros |
Euros |
||
Revenue |
|
|
633.4 |
601.4 |
614.8 |
779.2 |
1,565.7 |
1,760.3 |
1,780.7 |
1,833.5 |
1,890.3 |
1,927.1 |
||
Cost of Sales |
|
|
(528.3) |
(506.1) |
(517.8) |
(653.3) |
(1,276.9) |
(1,419.2) |
(1,470.4) |
(1,501.6) |
(1,548.2) |
(1,578.3) |
||
Gross Profit |
|
|
105.1 |
95.3 |
97.0 |
125.9 |
288.8 |
341.1 |
310.3 |
331.9 |
342.1 |
348.8 |
||
EBITDA |
|
|
88.5 |
72.6 |
69.2 |
81.6 |
156.9 |
176.3 |
179.7 |
173.9 |
194.3 |
200.8 |
||
Optg Profit (before GW and except.) |
45.6 |
34.3 |
33.4 |
36.5 |
69.1 |
82.5 |
85.5 |
78.2 |
97.1 |
102.1 |
||||
Net Interest |
|
|
(12.6) |
(11.4) |
(11.2) |
(10.3) |
(14.2) |
(15.0) |
(14.4) |
(19.5) |
(16.5) |
(16.0) |
||
Other Finance |
|
|
(2.9) |
(1.5) |
(1.6) |
(2.2) |
(5.1) |
(7.1) |
(8.4) |
(9.0) |
(9.0) |
(9.0) |
||
JV/Associates |
|
|
0.3 |
0.8 |
1.0 |
2.0 |
2.3 |
2.6 |
0.4 |
0.0 |
0.0 |
0.0 |
||
Intangible Amortisation |
|
|
(2.3) |
(1.9) |
(1.8) |
(2.1) |
(5.8) |
(6.7) |
(6.4) |
(6.4) |
(6.4) |
(6.4) |
||
Non-trading & exceptional items |
(20.2) |
(40.3) |
(21.8) |
(85.0) |
(95.7) |
(108.4) |
(145.1) |
(37.0) |
0.0 |
0.0 |
||||
Profit Before Tax (Edison norm) |
|
30.4 |
22.2 |
21.6 |
26.0 |
52.1 |
63.0 |
63.1 |
49.7 |
71.5 |
77.1 |
|||
Pension net finance costs |
|
|
(0.3) |
(0.5) |
(0.5) |
(0.3) |
(0.6) |
0.0 |
0.0 |
0.0 |
0.0 |
(0.6) |
||
Profit Before Tax (Renewi norm) |
|
30.1 |
21.7 |
21.1 |
25.7 |
51.5 |
63.0 |
63.1 |
49.7 |
71.5 |
76.5 |
|||
Profit Before Tax (statutory) |
|
|
7.6 |
(20.5) |
(2.5) |
(61.4) |
(50.0) |
(52.8) |
(89.0) |
5.7 |
64.5 |
70.1 |
||
Tax - headline |
|
|
(5.8) |
2.3 |
(1.5) |
0.5 |
2.6 |
1.4 |
12.4 |
(12.2) |
(17.2) |
(18.5) |
||
Profit After Tax (norm) |
|
|
23.2 |
20.5 |
19.3 |
20.1 |
39.1 |
47.2 |
47.5 |
37.5 |
54.4 |
58.6 |
||
Profit After Tax |
|
|
1.8 |
(18.2) |
(4.0) |
(60.9) |
(47.4) |
(51.5) |
(76.6) |
(6.5) |
47.4 |
51.6 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Average number of shares outstanding (m) |
448.9 |
449.1 |
449.5 |
536.3 |
799.9 |
799.9 |
796.7 |
796.7 |
796.7 |
796.7 |
||||
EPS - Edison norm (p/c) FD |
|
|
5.1 |
4.5 |
4.3 |
3.7 |
4.9 |
5.9 |
6.0 |
4.7 |
6.8 |
7.3 |
||
EPS - Renewi norm (p/c) FD |
|
|
5.1 |
4.4 |
4.2 |
3.7 |
4.8 |
5.4 |
6.0 |
4.6 |
6.7 |
7.3 |
||
EPS - (p/c) |
|
|
(6.3) |
(3.8) |
(0.9) |
(11.4) |
(5.9) |
(6.8) |
(11.7) |
(0.9) |
5.9 |
6.4 |
||
Dividend per share (p/c) |
|
|
3.05 |
3.05 |
3.05 |
3.05 |
3.05 |
3.46 |
1.68 |
1.68 |
2.73 |
2.90 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Gross Margin (%) |
|
|
16.6 |
15.9 |
15.8 |
16.2 |
18.4 |
19.4 |
17.4 |
18.1 |
18.1 |
18.1 |
||
EBITDA Margin (%) |
|
|
14.0 |
12.1 |
11.3 |
10.5 |
10.0 |
10.0 |
10.1 |
9.5 |
10.3 |
10.4 |
||
Operating Margin (before GW and except.) (%) |
7.2 |
5.7 |
5.4 |
4.7 |
4.4 |
4.7 |
4.8 |
4.3 |
5.1 |
5.3 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed Assets |
|
|
744.4 |
737.3 |
670.4 |
1,420.9 |
1,456.3 |
1,669.2 |
1,439.6 |
1,450.1 |
1,458.8 |
1,466.0 |
||
Intangible Assets |
|
|
211.1 |
173.8 |
194.5 |
603.3 |
606.3 |
699.3 |
605.6 |
596.9 |
585.9 |
574.9 |
||
Tangible Assets |
|
|
322.7 |
282.9 |
297.0 |
587.4 |
623.0 |
710.8 |
629.1 |
648.3 |
668.0 |
686.2 |
||
Investments |
|
|
210.6 |
280.6 |
178.9 |
230.2 |
227.0 |
259.1 |
204.9 |
204.9 |
204.9 |
204.9 |
||
Current Assets |
|
|
265.1 |
224.0 |
177.0 |
348.2 |
366.2 |
418.0 |
533.3 |
460.4 |
483.6 |
487.5 |
||
Stocks |
|
|
9.4 |
6.9 |
6.8 |
19.9 |
23.3 |
26.6 |
26.0 |
26.6 |
27.4 |
27.9 |
||
Debtors |
|
|
151.5 |
156.3 |
135.5 |
253.4 |
279.0 |
318.4 |
456.9 |
383.5 |
390.5 |
395.4 |
||
Cash |
|
|
104.2 |
60.8 |
34.7 |
74.9 |
63.9 |
73.0 |
50.4 |
50.4 |
65.7 |
64.1 |
||
Current Liabilities |
|
|
(229.6) |
(277.4) |
(227.2) |
(483.2) |
(545.8) |
(631.0) |
(758.3) |
(717.0) |
(717.7) |
(694.3) |
||
Creditors |
|
|
(226.3) |
(202.4) |
(224.8) |
(466.8) |
(532.9) |
(616.3) |
(639.6) |
(623.8) |
(624.5) |
(631.1) |
||
Short term borrowings |
|
|
(3.3) |
(75.0) |
(2.4) |
(16.4) |
(12.9) |
(14.7) |
(118.7) |
(93.2) |
(93.2) |
(63.2) |
||
Long Term Liabilities |
|
|
(504.7) |
(432.5) |
(434.2) |
(845.7) |
(894.3) |
(1,019.9) |
(895.1) |
(894.0) |
(892.8) |
(891.7) |
||
Long term borrowings |
|
|
(253.8) |
(140.8) |
(224.9) |
(482.4) |
(489.7) |
(558.9) |
(483.7) |
(483.7) |
(483.7) |
(483.7) |
||
Other long-term liabilities |
(250.9) |
(291.7) |
(209.3) |
(363.3) |
(404.6) |
(461.0) |
(411.4) |
(410.3) |
(409.1) |
(408.0) |
||||
Net Assets |
|
|
275.2 |
251.4 |
186.0 |
440.2 |
382.4 |
436.3 |
319.5 |
299.6 |
331.9 |
367.6 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
||
Operating Cash Flow |
|
|
78.6 |
55.8 |
72.2 |
27.9 |
128.4 |
143.6 |
86.8 |
123.2 |
176.3 |
191.2 |
||
Net Interest |
|
|
(13.2) |
(12.8) |
(12.8) |
(19.0) |
(16.9) |
(19.1) |
(17.7) |
(19.5) |
(16.5) |
(16.0) |
||
Tax |
|
|
(1.6) |
(5.7) |
(4.8) |
(5.3) |
(6.7) |
(7.6) |
(13.2) |
(12.2) |
(17.2) |
(18.5) |
||
Net Capex |
|
|
(27.1) |
(37.2) |
(25.8) |
(41.2) |
(81.2) |
(92.3) |
(99.4) |
(112.6) |
(112.3) |
(112.3) |
||
Acquisitions/disposals |
|
|
(54.1) |
(67.3) |
18.2 |
39.5 |
(4.1) |
(4.8) |
22.7 |
56.0 |
0.0 |
0.0 |
||
Equity Financing |
|
|
0.2 |
0.1 |
0.3 |
136.5 |
0.6 |
0.6 |
(2.7) |
0.0 |
(0.0) |
0.0 |
||
Dividends |
|
|
(13.7) |
(13.7) |
(13.7) |
(15.1) |
(24.4) |
(27.6) |
(27.4) |
(13.5) |
(15.0) |
(15.9) |
||
Net Cash Flow |
|
|
(30.9) |
(80.8) |
33.6 |
123.3 |
(4.3) |
(7.3) |
(50.9) |
21.5 |
15.3 |
28.4 |
||
Opening core net debt/(cash) |
177.3 |
152.9 |
155.0 |
192.6 |
423.9 |
492.7 |
500.0 |
552.0 |
526.5 |
511.2 |
||||
HP finance leases |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
|
|
55.3 |
78.7 |
(71.2) |
(354.6) |
(10.5) |
(0.0) |
(1.3) |
4.0 |
0.0 |
0.0 |
||
Closing core net debt/ (cash) |
152.9 |
155.0 |
192.6 |
423.9 |
438.7 |
500.0 |
552.2 |
526.5 |
511.2 |
482.7 |
||||
Closing PPP/PFI non-recourse net debt |
151.2 |
222.6 |
91.1 |
87.1 |
82.9 |
94.6 |
95.4 |
95.4 |
95.4 |
95.4 |
||||
Source: Company accounts, Edison Investment Research
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Research: Financials
FY18 was a strong year for FinTech Group (FTG) with healthy 17% growth in revenues and expansion in margins. In recent weeks flatex has launched successfully in the Netherlands, with the entry cost considerably lower than expected. Consequently, management upgraded EBITDA guidance in May. Management believes it has all the components for growth (notably, the brokerage platform & banking licence) and has hired an investment bank to review various strategic options. Given the growth potential, we believe the shares remain attractive on c 16x consensus FY20 earnings.