Biffa Share Discussion Threads

[watwungyi] 04/4/2007 14:18

I still think current share price is discounting its actual worth. Few months ago, I posted my notes here. You can see that Op(operating profit) for 2006 is conservatively £90.2 which is not very far off from what they announced. So it boost my confidence for buy decision. I'll keep buying.


Suppose OP grows around 8% every year.

2006 2007 2008 2009 2010
OP 90.2 97.96 107.26 115.84 126.97
Nopat 63.14 68.57 75.08 81.09 88.88
Deprec 59.8 61 62 63 64
Capex 73 72 70 71 71
Work cap 13 14 16 17 18
Ocash flow36.74 43 51 56 64

Assume overall debt at Sep is £ 334M and interest rate @ ~4.5 % (cost of debt)

Risk free rate + (equity risk premium * beta) = 5 + (5*0.7) = 8.5% (cost of equity)

Debt takes up 26% while equity takes up 74%

So WACC = 0.74*8.5 + 0.26*4.5 = 7.46%

Growth @terminal value, let's say 5%
So terminal value is £2570M
Discounting back gives 2570/(1.0746)^5 = £1793M

NPV 34.19 37.47 41.42 42.03 1793
Total £1948.11M

[watwungyi] 04/4/2007 11:32

I think collection division is naturally competitive. Barrier of entry is very low in contrast to landfill which Biff has 12% of UK landfill sites. You just need a license and a truck, and of course customer account, to start a business. And fragmentary nature of that collection divisions, there must be quite a few companies doing waste collection. So there's a high competition in this area. Biff's inability to increase price shows this. But on the positive side, it's building a strong customer base, which I expect will be good for long term. But the ta said there's strong growth in power generating and landfill division, which has better margins than others.
If you own vod or carphone warehouse, you know what i mean. good potential for growth, good management. But market is a kind of crowded, perhaps unlike top tiles. But today is an opportunity for me to add a bit more. It might ease further a bit. But don't think it wil be below or even near 300p. Finger cross.

Good luck to all Biff's holders

[mitzis] 04/4/2007 09:23

City wire comment:

[din007] 04/4/2007 09:05

Biffa says FY revenues, profits to be at lower end of expectations UPDATE
Date : 04/04/2007 @ 08:32
Source : AFX


Biffa says FY revenues, profits to be at lower end of expectations UPDATE

(adds chief exec comments)
LONDON (AFX) - Waste management firm Biffa PLC has told the market that
full-year profits and revenues will be at the lower end of expectations.
The company, which demerged from utility Severn Trent PLC last September,
said profits from its Collection Division were likely to be below those achieved
last year as it raised prices only selectively instead of across the board in
order to retain more customers.
Biffa chief executive Martin Bettington said the earnings slowdown was a
strategy to keep hold of customers when new regulations come in in October
requiring customers to pre-treat waste before it is taken away for landfill by
Biffa. This will raise costs for consumers and the company wants to retain
market share by not raising prices across the board.
"We've been looking at our local accounts," he told AFX. "The biggest change
is that last year we put in a double-digit across the board price increase,
which we've not done this year as it's not appropriate. The way the market is
developing with the new regs in October we wanted to concentrate more on service
and being more focused in terms of prices increases."
Biffa's Leicester plant has also affected this year's numbers as it will not
open following upgrades until the Summer.
Bettington said the company was not angry about Chancellor Gordon Brown's
Budget decision to raise the landfill tax by 24 stg/tonne to 32 stg/tonne by
next year.
"Even with 24 stg a tonne you're below EU levels," he said. "32 stg/tonne
will bring it closer. It's something we've been saying for some time: if we
really want to get serious as a country about recycling, then you have to put
the tax up."
The resource recovery/landfill division and the power divisions are expected
to show good growth, added the company.

[din007] 04/4/2007 09:01

We should maybe rename this thread "Biffa - Wasting our money".

:-)

But I`m still in for the ride as this should correct it over the longer term.

[onlyonestorm] 04/4/2007 08:27

Well it looks like the bottom could be £3.30/33!!!!!!!!

[retroz3] 04/4/2007 08:24

Sold my 16,000 - probably a panic reaction but couldn't ake the risk and overall have been in and out since £2.60 and made a nice profits on several occasions. Lets see how this settles down.

[luderitz] 04/4/2007 07:38

There you are then, maybe a dip In share price today (spot of profit taking by some) but still look to be on course for an Improvement In the medium/long term In my view.

[watwungyi] 03/4/2007 22:57

Trading update tomorrow, Good luck everyone. Any good news would help break 360 and 380/400 would be reachable before May/June.

[mitzis] 03/4/2007 14:26

Early afternoon ...

[gsands] 03/4/2007 08:29

Breakout. But trading statement tomorrow so buying this breakout is not without its risks...

[retroz3] 02/4/2007 19:44

Let's hope so. It seems to be under the radar at the moment.

[mitzis] 02/4/2007 19:34

Approaching breakout mode today.

[bountyhunter] 26/3/2007 23:50

LUDERITZ - 26 Mar'07 - 22:50 - 478 of 478 (Filtered)

[luderitz] 26/3/2007 22:50

Who cares about people like that, anyway looking forward to this annoucement:

[46pete] 26/3/2007 18:49

Hand bags at dawn !!!
Why not resolve your differences somewhere else, like a pub.

[luderitz] 26/3/2007 16:47

Whats the point of filtering posts If your still going to read them ?

...If there Is an idiot around here It's not me -:)

[bountyhunter] 26/3/2007 16:40

LUDERITZ - 26 Mar'07 - 14:28 - 474 of 474 (Filtered)

that's better; I doubt that I missed anything relevant.

[luderitz] 26/3/2007 15:28

What a charming thing you are -:)

[bountyhunter] 26/3/2007 15:21

Timewasting hypocritical idiot filtered.

[bountyhunter] 26/3/2007 14:55

yawn, DYOR in future!

[luderitz] 26/3/2007 14:08

You seem Intent on having an argument about nothing.

This board's about the prospects of BIFF's share price and nothing else.

[bountyhunter] 26/3/2007 12:30

>> Maybe you have missed an announcement BH
!
Ok which announcement could I have missed since they are all listed in the News section. Have you bothered to look at all? It doesn't take very long to check those since the one I cited.