800 SUPER HOLDINGS LIMITED
5TG.SI
800 Super Holdings Ltd - Developments are on track
- 1H FY16 revenue of S$76.26mn fell short of our estimate of S$83.9mn.
- 1H FY16 NPAT of S$4.94mn formed 31.3% of our full year estimate of S$15.8mn.
- Cut our original FY16e and FY17e revenue estimates by 8.7%.
- Long-term developments of truck depot, biomass waste to energy plant and material recovery facility are on track.
Adjustments made to our forecasts.
- 1H FY16 revenue was lower than our forecast by 9.1% and NPAT of S$4.94mn formed 31.3% of our full year estimate of S$15.8mn mainly due to our overly-aggressive revenue assumptions.
- This causes us cut our original FY16e and FY17e revenue estimates by 8.7% as the second half is traditionally stronger than the first.
- Consequently, our new NPAT estimates for FY16e and FY17e are 13% and 16% lower, respectively.
Tender called for Biomass waste to energy (WTE) plant and material recovery facility (MRF).
- The truck depot to support the South-West region Integrated Public Cleaning (IPC) contract has been completed. The two new projects of WTE and MRF are expected to be completed 2H CY2017.
- We have raised our gross CapEx estimates for FY16e and FY17e to c.S$20mn each, from our previous assumptions of c.S$6.7mn.
- Due to the strong operating cash flow of the business, we have assumed only S$10mn of additional borrowings over the next two years to fund the two projects.
What do we think of this?
No impact from termination of memorandum of understanding (MOU) with Zero Spot.
- 800 Super simultaneously announced the termination of the MOU. This will not have any material impact on the Company's profitability.
- Construction of the biomass WTE plant is proceeding as planned, and the electricity generated will still be used at the depot and MRF.
- Sale of steam as originally intended will not proceed.
Balance sheet remains stable and cash flow remains strong.
- Net gearing is marginally higher at 57.9% in 1H FY16 vs. 57.7% in 2H FY15.
- The Company generated a positive free cash flow of S$8.1mn in 1H FY16 vs. negative S$0.7mn a year ago in 1H FY15.
Investment Actions
- We continue to like 800 Super for its defensive business model amidst the current market volatility.
- We have a new lower target price of S$0.58 (previously S$0.66) due to the lower earnings forecasted, while retaining the valuation method of 7.5x FY16e P/E multiple.
- Maintain BUY.
Richard Leow CFTe
Phillip Securities
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http://www.poems.com.sg/
2016-02-15
Phillip Securities
SGX Stock
Analyst Report
0.58
Down
0.66
