The Bingo Industries Ltd (ASX: BIN) share price has risen more than 3% in response to its half year report.
Bingo Industries is a waste management business, it provides residential and commercial waste services, recycling services and bin manufacturing. It started in 2005 when the Tartak family purchased a small skip bin business.
Here’s Why The Bingo Share Price Is Up 3%
The waste management business said that net revenue growth was 25.4% to $178.7 million, supported by “solid” organic revenue growth of 16%.
‘Underlying’ EBITDA grew by 4.1% to $45.6 million (click here to learn what EBITDA means), but the underlying EBITDA margin decreased by 530 basis points, or 5.3%, to 25.5% due to headwinds in the multi-dwelling residential construction market in New South Wales and Victoria. There was also the timing of ramp-up expenditure in Victoria and some sites were offline for upgrades.
Underlying net profit grew by 3.8% to $23 million, but reported net profit declined by 24.9% to $13.4 million. However, operating free cash flow increased by 33% to $47.2 million with a cash conversion rate of 103%.
Bingo Industries Dividend and Balance Sheet
Bingo Industries decided to maintain its dividend payment at 1.72 cents per share.
It had a net cash position of $140.3 at December 2018 and net assets per share of $1.21, which compares to the current share price of $1.32.
Bingo Industries Management Comments
Bingo Industries CEO and Managing Director Daniel Tartak said: “Our work in hand remains solid and underpins our business going into FY20. We are seeing a growing pipeline of opportunities in infrastructure, particularly social and transport infrastructure.”
Is Bingo Industries A Buy?
This result was not a surprise to investors, after Bingo had already warned the market.
Bingo pointed to the fact there are plenty of positives to look forward to including continuing population growth, growing waste generation, a large infrastructure pipeline, the scope to build market share and the potential to grow margins as the business gets bigger.
However, the slowing property construction market and pricing pressure could be a negative.
Bingo is not normally the type of business I’d go for with my own portfolio, but the large drop in share price and potential for decent ongoing organic (and ‘inorganic’) growth seems compelling, so Bingo could be one to watch over the next couple of years.
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