Growth Focus: Bingo Industries Ltd (BIN)

by Patrick Taylor




Date of Data Capture:
11/5/2018
 
Name:BINGO INDUSTRIES LTD (BIN)
      
Classification:Waste Management
 
Current Price: $2.88
 
Market Capitalisation: $1.20B
 
Forecast EBITDA Growth: 25.00%
 
Yield Estimate: 1.68%
 
Consensus Price Target: $3.13
 
# Covering Analysts: 4
 
Discount at Current Price: 8.68%
 
Price Target Trend: Increasing-Flat
 
Signal Timeframe:Monthly-Weekly-Daily
 
TrendBias: Up-Flat/ Medium-Short

Indicators:
Short-term:Positive-Neutral
Medium-term: Positive
Long-term:Positive-Neutral

Recommendation:Buy
 
Focus:Capital Growth
 
Set up Notes:
·    Strength should be an easy thing to buy but it usually isn’t – here we are looking at a strong combination of fundamental performance and growth combined with a strong technical setup.
·    Performance has been very good since listing early in 2017with strong sales, margins and earnings set to drive forward through to 2020 with aggressive growth set to continue.
·    Technically robust BIN has been cycling higher through a major medium-term uptrend, increasing value by around 60% in the last year.
·    Analyst sentiment is strongly positive with increasing price targets aiming above $3 resistance overhead, with good support layered down to $2.50 from here if needed.


Growth Focus: Bingo Industries Ltd (BIN)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index

We normally avoid rubbish stocks... except when they have excellent growth potential like Bingo Industries Ltd (BIN) which is when we take a “waste, yes/want, yes” approach.

Starting out as a family business in 2005 with 4 trucks, BIN has grown into a $1.2B company with over 250 trucks operating a diverse and integrated waste and recycling company. Based in Sydney with a strong NSW focus, Bingo services the building and demolition industries as well as catering for domestic, commercial and industrial operations and has been making some early stage moves into Victoria and Queensland.

Performance has been strong in the last year with revenue growing by 43% and earnings by 40%. BIN carries forecasts for earnings growth of 25% this year and strong expectations for continued growth out to 2020. A great deal of this growth has been organic, though Bingo have also done the rounds to pick up some strategic acquisitions. With a growth strategy targeting cross-border markets in Victoria and Queensland there should be plenty of room for further growth through either trash or treasure with favourable sector forecasts and opportunities to consolidate a fragmented market.

Of particular interest is the potential shift to own-state processing in NSW that would halt transporting rubbish into QLD, something Bingo has been preparing for through the purchase of the Paton’s Lane site which could be developed into a processing site within NSW. This combines well with the other acquisitions of NRG, Konstruct Recycling, Resource Recovery Victoria and AAZ Recycling as they look to build their national exposure and brand.

Pricing history shows a strong 12 months and 60% rally from their listing date of May 2017 and initial float at $1.80. The uptrend playing out in the medium timeframe has good tracking correlation in the short-term and shows a constructive rally unwinding within a cyclical uptrend. There are no sell signals present as yet and while we do see major structural resistance setting in at the obvious psychological level of $3.00, we also think Bingo have it in the can to continue lifting the lid off expectations.

 We see good momentum building here with buy signals being indicated the over the long-to-medium-term, even though we do see some extension and overreach in the short-term daily timeframe. This means there could be short-term pullback, but this could easily be swept up and away by the longer-termed positivity. Overall we think this is an exciting opportunity that brings together a strong fundamental outlook and an exciting technical viewpoint that makes us not want to curb our enthusiasm.

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.