Biffa Share Discussion Threads

[onlyonestorm] 12/1/2007 10:19

nOW YOUR GOING BACK A BIT!!!

[steeplejack] 12/1/2007 09:46

BRASS...."where there's muck there's brass"

[onlyonestorm] 12/1/2007 09:41

I would appear that the old saying "where there's muck there's money" is true!!

Stormy

[mitzis] 12/1/2007 09:39

Great post w thanks..

[watwungyi] 12/1/2007 00:12

For those of you who want to know a bit more about Biff, here's my notes about the company.

Best of luck to all


Subsidiaries: UK Waste(acquired for £380M), Hales Waste Business(£146M)
Competitors: Cleanaway(Brambles), SITA(SUEZ), Veolia, Viridor, Waste Recycling Group

Volume analysis:
Collection; 4M tons (2005) £107.25 per ton.
SWaste;
Landfill; 7.5M tons (2005) (include Biff collection division and local authorities and other waste collections agencies)
Powergen; 380GWh (for its own use) has 63MW installed capacity and 45MW through joint venture.
Industrial and commercial waste management division is the highest value market segment

Financial positions:
No convertible loans! (Good)

Net Debt decreases mainly due to lack of convertible notes in the period although borrowing increases. It seems that the company borrowed money to compensate for the convertible loans in the previous period.
Extra borrowing £332.3M (But chairman said it drew £334M! slight difference)
So let's take total net debt as £352.4M (Decrease -39.5% from last year £582.3M)
Shareholders' fund reduced by £39.3M (-5.99%). The reason is unclear. Dividend paid for previous period? But Shareholders' fund at the end of period is £617.2M
That gives ROCE of 48.9/(617.2+352.4) = 5.04% (not so impressive)
Previous year ROCE 45/(656.5+582.3) = 3.63%
So ROCE up 38.8% Can they maintain this trend?

Gearing: 352.4/617.2 = 57.1% (The company reported gearing of 36% but it calculates its gearing ratio as net debt divided by equity PLUS net debt and that significantly reduce gearing apparently.)
Although gearing is relatively high (above 50%), the company is expected to produce stable and steadily rising income as its contracts extend over ten to fifteen years, it shouldn't have a problem with high gearing. But I am inclined to ask why the company uses different definition of gearing. And more than 80% of borrowing is long term.
The group said it has taken out £334M is taken out as bank loan but on the balance sheet only £332.3M + principal finance lease(presumably up-front payment of £0.8M is recorded). So £0.9M is unaccounted for.

[watwungyi] 12/1/2007 00:05

Agree login. Since then I stopped holding equity fund, but I do hold Monthly income plus from Invesco as I don't know much about bond. It's not too bad so far but the return's not like shares of course.
Login, don't worry about expanding into Europe, UK market alone is worth billions. I would prefer getting market monopoly in UK than going abroad.

[bountyhunter] 11/1/2007 16:10

wial : NG. is National Grid - just type NG. in the EPIC code box at the top of this page. I'll check out WPP group later.

[what is a login ?] 11/1/2007 16:03

Watwungyi: Here's a quote from Warren Buffett that I looked up five minutes ago before looking at this thread (it made me laugh):
"By periodically investing in an index fund the know-nothing investor can actually outperform most investment professionals".
bountyhunter: is NG. Nova Gold? I'll check it out. WPP Group are my other main New Year Investment for now.
BIFF really ought to be able to expand on the continent with the so-called United Europe but I doubt if it will be able to. Time will tell.

[bountyhunter] 11/1/2007 13:44

yes very hard to find; NG. is my only other currently; do you hold any other similar stocks? (reasonable divi with good growth prospects)
I switched here recently from SPW as I didn't wish to end up holding Spanish shares; looks like a good decision so far.

[watwungyi] 11/1/2007 12:24

Mostly I don't trust so-called analyst and I am not impressed by 95% of fund managers. I bought Schorders mid-cap 250 fund for so long and return's been great 30% annualised over the past three or four years. So I thought this is a great fund and a brilliant manager but during that period I found out later that it never beat the benchmark index. Since then I bode farewell to funds, only specialist ones, like merrill lynch new energy tech.

[what is a login ?] 11/1/2007 12:12

I climbed aboard this morning at 320p. For me this is a new year "value" stock. Such stocks which pay dividends and also have good growth prospects are getting harder to find. Lehman Brothers said 350p for Biffa yesterday. I think it may well get there sooner than anyone thinks.

[watwungyi] 11/1/2007 11:47

Technically speaking, yesterday spike was accompanied by healthy volume and I think it's a good sign that share price has reached a new higher level. Probably stay here for a while, or who knows? I regularly checked the two websites, Biff and Veoliauk. And each time I am satisfied that Biff's been doing really well. Amount of landfill sites are limited and Biff has about 10 - 15 % of overall landfill sites in UK. The one and only thing we should be reminded is that ~75% of its revenue are from industrial and commercial sectors, like WHSmith, DSGI(Currys, PC world etc), while Veolia has taken up more into municipal areas. I think Biff is also expanding its market shares in municipal area. But Biff has not as many subsidiaries as Veolia althouhg Veolia's margin and ROCE is slightly better, but in terms of quality of earning Biff seems more attractive.
Collection division is the highest earner and this is the most important one I think because first it has good network of colleciton routes all over the country and it supplies raw materials for resource recovery and landfill later. But the drawback is there are so many competitors in this division and no strong barrier of entry. (You just need a licence and a truck to collect waste really) But landfill and recycling has higher barrier of entry. The fact that this company's been awarded soil replenishing award?? is good for future potential award of new landfill sites. Also the company update its web page regularly which is lacking in others. (Veolia, SETA owned by Suez from France)
It's glass recycling program might prove popular among shops and pubs.
So I believe management is doing their best. First there's no exercise of options reported so far. They increase their stake at market price.
But it's difficult to work out P/E now as the full year result has not come out and due to its recent demerger fro Strent. But interim results are strong enough to push this higher. We need to wait for particularly two annnouncement, first is openign of new landfill site in NIreland, which should have been announced last month, don't know why? Second is trading update for the second quarter, which should further help.
For takeover, this is unlikely as the CEO said on the day interim was announced on Bloomberg that they thoroughly enjoy being independent, which I think is the best thing so far. Let's not ourselves drawn into takeover mania cruuently fashioning here due to cheap credit.
I tried to work out its values in details a few weeks ago. My assumption is that if its revenue growth grows 5-6% a year and become steadier after four five years, it's share price are hughely undervalued. I was in since 260 in November. So that proved to be a good recent buy and I intend to hold this for years to come and adding more on the way.
In waste industry, the priority is to use less waste, then recycle only then send to landfill sites, But it's already difficult to make people use less waste.

[rogerl] 11/1/2007 11:07

mitzis
I agree wholeheartedly

[mitzis] 11/1/2007 10:19

I bet it will be over 380p by end of 2007 Warranty and thats not a ramp either..

[warranty] 10/1/2007 20:11

The peeps who bought in early were the wisest ones before the market really picked up on it. Totally agree rogerl has to be one of the safest places around currently with lot's of growth potential and a rising dividend.

Waste disposal is a growth industry, there are huge barriers to entry, increasing asset value with the landfill and a bid possibility as well. What more could anyone want. Still well underpriced to me as the true value of assests and earnings have not yet been truly recognised and firmly believe we will be over £3.50 by the end of 2007.

Just my opinion and not a ramp or recommendation to buy.

Off topic, anyone interested in growth and divi try looking at DWN. Value any views but looks to have turned to me.

[rogerl] 10/1/2007 16:32

The safest of bets on the market in my view.

[onlyonestorm] 10/1/2007 11:46

Spangle93 - Bought this in our share club last Thurs!!

Good Luck

Stormy

[retroz3] 10/1/2007 10:17

Spangle93

Many thanks for the update

[spangle93] 10/1/2007 10:05

From the morning ADVFN market report
Positive broker comment also lifted Shares in Biffa 11-3/4 pence higher to 323, after being initiated as 'overweight' by Lehman Brothers with a price target of 350 pence, offering 14 pct upside to the current price.

The broker noted that Biffa is the only listed pure play UK waste company, and is therefore the best option to gain exposure to expected growth in the industry.

Been trying to by this for our share club this morning - if only our meeting had been Monday night :-(

[mitzis] 10/1/2007 09:50

Thanks again retroz cant help you there with level 2 but your right its going well on a bad day bodes well.

[retroz3] 10/1/2007 09:48

Sorry Mitzis - haven't got the info to hand but basically they were advising purchase because its a well run company, consolidating marketplace and a good cashcow. a Safe share, profitable with dividend and probably too small in terms of the competition. I think that was the gist of it.

Its very encouraging to see BIFF going up on a bad market day - number of shares bought at this stage of the day is also interesting. Unforunatly I don't have level 2 so can't see the order book. If its an Institution buying I guess we will se an RNS shortly.

[mitzis] 10/1/2007 09:44

Thanks for info retroz what do Walker Crips have to say..?

[retroz3] 10/1/2007 09:39

Mentioned in Investors Chronicle and Shares magazine pre Christmas as a likely takeover target. Also my broker, Walker Crips has tipped it. I have 4,000 shares purchased at £2.61 approx 6 weeks ago and watching eagerly. I bought BIFFA as a safe share but its doing very nicely.

[mitzis] 10/1/2007 09:33

What takeover rumoures..?

[retroz3] 10/1/2007 08:29

Any news out? What has caused the spike up - it looks interesting. Wonder if there is any truth in the takeover rumours?