800 Super Holdings Ltd - Phillip Securities 2016-04-18: Demand drivers remain intact

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800 SUPER HOLDINGS LIMITED 5TG.SI 

800 Super Holdings Ltd - Demand drivers remain intact 

• NEA published waste and recycling statistics for 2015. 
• More waste generated, waste recycling gaining traction. 

What is the news? 

• National Environment Agency (NEA) published waste and recycling statistics for 2015 last week. Key highlights were the growth in waste disposed and growth in recycling. (Source: http://www.nea.gov.sg/energy-waste/waste-management/waste-statistics-and-overall-recycling) 

 More waste generated in 2015. 

• The amount of waste generated in 2015 increased to 7.67mn tonnes, a +2.1% increase over 2014. NEA commented that this was in tandem with population growth and higher affluence. 

 Overall recycling rate was up too. 

• The amount of waste recycled grew +4.0% to 4.65mn tonnes in 2015. In terms of proportion of total waste, waste recycled had a modest increase to 61% from 60%. 

What do we think of this? 

 Demand drivers we had previously identified are spot on. 

• We had previously identified on Page 4 of our trading note (9 September 2014), three drivers of higher waste and recycling: 
  1. population growth, 
  2. economic growth and 
  3. environmental initiatives. 
• We said that there is a "clear trend of increasing waste generated in Singapore in tandem with population and economic growth", with economic growth "leading to higher incomes, higher propensity for consumer discretionary spending (upgrading consumer goods to replace existing goods), resulting in more waste being generated". 
• Moreover, environmental initiatives have led to greater environmental-awareness and consequently recycling of waste is gaining traction. 

Maintain "Buy" on the defensive business model; unchanged target price of S$0.58 

• 800 Super is clearly well-positioned to capitalise on the above mentioned trends, as it provides Waste Management & Recycling services. 
• It is one of four licenced Public Waste Collectors (PWCs) appointed by NEA to provide public waste collection services. 
• 800 Super already has a Material Recovery Facility (MRF) in place, and is in the process of developing a waste to energy (WTE) plant to cater specifically to horticultural waste. 

Richard Leow CFTe Phillip Securities | http://www.poems.com.sg/ 2016-04-18

Phillip Securities SGX Stock Analyst Report BUY Maintain BUY 0.58 Same 0.58