Case Study on 800 Super (SGX: 5TG)

Date: 28 September 2018

The Company was incorporated in Singapore on 11 April 2011 as a private limited company. On 16 June 2011, the Group changed its name from 800 Super Holdings Pte Ltd to 800 Super Holdings Limited.

The Group is an established environmental solutions provider for the public and private sectors in Singapore. The Group provides waste management and recycling, cleaning and conservancy, and horticultural services to a wide range of customers including residential, commercial, industrial, institutional customers, government departments and statutory bodies. The Group currently owns two materials recovery facilities in Singapore with a total capacity to process over 50 tonnes of waste a day. Waste is sorted into different streams in these material recovery facilities for reuse and recycling.

The Group is one of the four public waste collectors appointed by the National Environment Agency to provide waste collection services to domestic and trade premises.

It currently provides waste collection service in the Ang Mo Kio - Toa Payoh sector in Singapore.

CATALIST-LISTED environmental services provider 800 Super recently reported a $1.64m Q4 loss, reversing from a year ago profit of $2.72 million, with manpower cost coming in 20% higher than expected. The stock has dived 33 per cent over the last two days of August and is at its lowest over a one year period, down from a high of S$1.25 reached in mid-January 2018.

PhillipCapital said in its research note that the outlook was positive, adding that the loss reported in the fourth-quarter is an aberration and the business has not changed structurally.

On Sept 3, PhillipCapital cut its target price for the stock to S$1.03 from S$1.30 but upgraded its call to "buy" from "accumulate", saying that the counter was oversold.

Below is our analysis of their financial:



Let’s look at more insights to this stock:

Intrinsic Value Analysis

Using the Discounted earnings model, with the EPS growth rate based on adjusted CAGR of the Environmental Services industry, 800 Super has a positive 33.73% margin of safety is at an intrinsic value of $1.222 against its current share price of $0.81.

Beyond the fundamental of the company, let’s look at how 800 Super is at, compared to both local and global peers within the same industry when we include the Piotroski F score as an important metric that helps to identify fundamentally strong companies.

Peer Comparison

Further insight to how 800 Super is performing against the industry and local peers at one glance.

The environmental services provider said that the industry that it is operating in is “highly competitive”. It competes with its peers based on the range and quality of services provided, timeliness of service delivery, and pricing.

800 Super Holdings currently trades at a price – to-earnings ratio of close to 16 with a dividend yield of 1.2% as compared to its peers.

Ownership

With the reported loss in their fiscal fourth quarter profit, the controlling shareholders of 800 Super Holdings recently acquired almost $1 million of share from the open market.

The purchases increased Yong Seong Investment (an investment vehicle whose major shareholders include 800 Super executive chairman Lee Koh Yong, chief executive Lee Cheng Chye and Lee Hock Seong) to 67.63 from 66.93 percent.

With the management’s willingness to buy at an average price of $0.82 – with their last purchased in 2016 at an average price of $0.437, is that a positive signal?

Total Shareholder Return

Back to your investment, if you had invested in 800 Super 5 years ago, your current return will be +255.10%. However, based on the chart below, we are seeing red bars if you had only done so 1 year ago.

With new projects of the sludge treatment facility and Pasir Ris- Bedok public waste collection sets to contribute to 1Q FY 19, we leave you to decide if 800 Super is a good inclusion into your current portfolio.

To gain more insights of stocks using ShareInvestor’s webpro, please visit http://www.shareinvestor.com/sg

Happy investing!

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