Renewi Share Discussion Threads

[sirrux] 29/1/2019 12:18

Gnawe, I think we'll just need to wait and see. On the PFI stuff, the council concluded that it would be more in the public interest not to know - that always begs the obvious question, how will the public suffer if they know?

The BBC are appealing that decision according to the article. Ultimately whatever Renewi's fate and I hope it's a good one the falling share price certainly indicates something troubling more than just PFI-related issues, but for all we know Renewi may not be the bad guys here just the victims.

That's the gamble - if they are it's nose dive time. Clean or dirty, what's the verdict? There's potentially treasure here, so keeping an eye on it.

[gnawe] 29/1/2019 11:04

Could someone please explain to me in plain English what the issue is here. Your comments would be greatly appreciated.

[pugugly] 29/1/2019 10:49

sirrux - Many thanks for that link - Some most interesting follow through links suggesting further other contracts areas where there may be ongoing cash drains for RWI.
The $64K question - Is this knife still falling and the coy may do an Interserve - or is it within say 5% of the bottom?

[george stobbart] 29/1/2019 10:48

Hi sirrux, Renewi has already exited the UK PFI toxic market and has impaired all PFI contracts back in Q1 18.

Renewi has no plans to invest in the UK again but these is still a c. 10% of EBITDA coming from UK toxic legacy contracts from Shanks. Any investigation / claim is related to the local council and their current joint partner (John Laing).

The exposure to the UK will continue to decline to <3% by 2025.

[sirrux] 29/1/2019 10:31

Calm before the storm time.

This is interesting,to me the answer is obvious but the spin the media might put on it will be the telling part. By BBC, I take that to be an official investigation! Well, sort of, tax payer funded at least.



Hopefully they will also break the full PFI story and not just the Renewi part where they and their shareholders became victims. The councils lost too and I am sure the BBC will focus on that side of it, but you really need to look at who was really benefiting from PFI to see the winners and where that money is today.

[george stobbart] 29/1/2019 07:33

Why is leverage an issue?

Leverage has peaked at 2.99x EBITDA and the July 2019 Belgian bond is partly refinanced.

Interest coverage by current cash flow is 4x covered and the dividend is fully covered at around 130-140% similar to other listed infrastructure stocks.

In fact, in the next fiscal year FY20 the board is expected to recommend raising the dividend because the company is generating enough cash to drop the leverage at 2x in line with guidance.

The dividend per share is currently very low compared to cash generation and low levels of leverage compared to international peers.

Covanta, a direct peer to Renewi in the US, has 5.8x leverage almost double that of Renewi. See their presentation.

[sirrux] 29/1/2019 07:17

Definitely a sector to be in but it is marred by a bungling governing class assisted by regulators. This is not just a Dutch issue, but a global issue. Firms like Renewi are trying but the goal posts keep shifting about and they despite the size they are cannot change this, they must navigate it.You might see a cheeky bid and that would help as it would flush out a lot more hands currently holding below the requirements to disclose. There is value here and there will be some out there with the power to unlock.In a ideal world you could recover damage caused by the governing classes but they are more or less immune and can destroy businesses at will if they really want to.

[taximania] 28/1/2019 22:33

I have always been offered better than bid so nothing new there.
No smoke without fire and the share price performance is abysmal.
Dont forget theres gonna be any update very soon ...i dont really want to be holding any on that day ...will be easy enough to buy again even its a bit higher but you have to assume its not going to be pretty i think,

[dplewis1] 28/1/2019 22:10

Any strength does seem to get sold into, but there have been no TR-1's so I'm not sure what you mean by 'still trying to exit.' The last holdings RNS was Paradice increasing.

[pugugly] 28/1/2019 12:17

Still better offered than bid - So looks as though major holders could still be trying to exit

[pugugly] 28/1/2019 08:24

dplewis1 -- Fully agree - Any good news should produce a signicant bounce - Also visi-versa if investigation results are negative - I am here as potentially a nice gainer but I am having to type with thumbs as fingers lost trying to catch too many falling knives !!!!

[dplewis1] 28/1/2019 08:16

Pug I don't really agree, but you do make a fair point about margins - they are very slim in the area in which they operate. That's why they decided to use scale to generate better returns so I don't think it was some kind of trophy acquisition by Dilnot, they paid 6x I think so not beyond the realms. I'm not here to defend the company though, I am not blind to the share price I do think a couple of good bits of news on the ATM and asset sales will turn it round fairly quickly though.

[pugugly] 28/1/2019 07:55

See also

A bit old but well worth a read - Looks as though the market is just haggling about the value - Down a further 13% last week If any -

Debt as said before is high and if any increase in interest rates might prove toxic - Also intangible assets are very difficult to value and in a fire sale might prove to have no value - (imo) But as said by many on these boards - DYOR-

[pugugly] 26/1/2019 11:00

dplewis1- No magic technique but having been burnt badly in early days of investing now dig much deeper and have thereby avoided some nasty losses- Chief execs will usually never admit that their company is going down the drain -

I must disagree with your point re value before merger and infrastructure groups - Too many ceo's over pay for mergers which very often destroy value and there are many similarities between PFI infrastructure coys and RWI in that in many cases their paymasters are local institutions or authorities with all the risks brought by low tendering to get the business. Do you not agree?

[dplewis1] 25/1/2019 20:56

To clarify, this is not an easy business to value.. but simply wading in and saying that there might be a placing is just a bit crass. Currently the market cap is sitting at around half of what VG was valued before the merger.. Look at the valuation of Biffa when it was sold by the PE consortium and you might have some kind of comparison. If you have some kind of magic valuation technique that nobody else is aware of please do let us know.

[dplewis1] 25/1/2019 20:50

Pug I've seen your posts on other boards and you seem to collate rather negative ideas and then re-post them like it's some kind of new analysis. From another perspective, comparing RWI to a pure U.K. infra play is just plain scare tactics - I've really no interest in detailing to you the merger between Shanks and Van Gansewinkel, but I would advise looking at the businesses before 2017.

[pugugly] 25/1/2019 19:03

gnawe:- Not sure of the legal position but if it is found that treated waste/soil did not meet regulatory standards then I am not sure if liability insurance would cover potential claims -

The reason why I am looking at this is that the shares appear to be over sold - Debt however is the other major risk - trying to work out how much discount should be allowed if major share issue requird -


Based on recent discounts required for emergency funding of UK infrastructure companies such as Kier I am guessing that it would be substantial.
(spelling errors hopefully all now corrected)

[gnawe] 25/1/2019 17:37

The company should have indemnities against any claims ?

[pugugly] 25/1/2019 16:20

What chance of legal action against the company if not only is approval for
the use of treated soil does not receive regulatory sign-off BUT lack of approval leads to damages claims from previous users in respect of regulatory agency findings?

Could this be the bear in waiting?

[taximania] 25/1/2019 13:17

not sure if i want to have any next week;

Last year we issued a trading update on 12 Feb.

This year’s , expected in next week or so.

Regards

Renewi plc

[jdung] 25/1/2019 11:33

the share price is 50p at 3 months ago,
I say that time, the tared line maybe at 35-40p,
today price is 29p what is tared support line?
I ask city boy, who working city, he just say: not buy.

[robsy2] 24/1/2019 11:04

Morning all

Interesting post from George, so thanks for that.I share his view and have been buying some this morning.

A lot of things have gone wrong here and IMHO it all looks a bit overdone.

This company may have some problems but it does something useful , is a big player and is profitable.
I think it could have a decent future . The new management team seem to be focussed, there are a number of things that are quite likely to happen in the next 6 months that will change sentiment.
Even the dividend looks fairly safe but they could cut it by half and it would still be paying out 5%.
Plenty of upside i think.
R2

[taximania] 23/1/2019 21:37

The only thing that is high then is the net debt ?

[george stobbart] 23/1/2019 19:07

Worst case scenario - regulator shuts down the Thermally Processed Soil market in the Netherlands and this ATM facility finds an alternative product to sell. Please note that soil is just one ATM product - they also process oil, waste water etc.

The Canadian business should normally sell at a high premium to book given the demand there for infrastructure assets from the Brookfields, Covanta, Pension Plans etc. The REYM Cleaning business is a difficult sell because of their volatile margins.

But RWI's current valuation at EUR 275 mn is a bit of an overkill.

Renewi finished 30 Sep 2018 with:

Cash: EUR 105.2 mn
Property and Plants: EUR 701.1mn
Intangible assets: EUR 680.6 mn
Net Assets: EUR 448.0 mn

How is it even possible that they have a market cap of EUR 275 mn? (Unless it is a ponzi scheme or scam)

Book Value is c. 55p in GBP (but listed competitors trade at 2-4x P/B)