We continue to highlight the strong fundamentals underpinning CWY. We also like the defensive nature of its earnings/cashflow, as well as the largely vertically-integrated business model and balance sheet capacity.
It has taken many years so it is not before time that Australia’s biggest waste management company looks like it may finally be getting its act together. Transpacific Industries has completed its name change to Cleanaway Waste Management, and reported a half year profit of $23 million to turnaround last year’s December half loss of $42 million. Revenue also went up, by 8 per cent to $747 million.
Cleanaway Waste Management's guidance to a flat first half is disappointing, Macquarie concedes, but not deserved of the subsequent -13% sell-off. The second half should see improvement thanks to price increases, cost reductions and hopefully, as the broker puts it, stable commodity prices.
At the investor briefing, the company provided no further update on its outlook. Macquarie believes there is solid earnings visibility and clear long-term growth options, while management execution is a key ingredient.
Cleanaway's AGM update was so bland it was worth a 5% gain yesterday against the flood. When no news is good news, the broker notes. Trading to date is in line with expectations, guidance is unchanged and Tox integration is proceeding as planned.