The outlook is positive. In our recent reports, we had been stating our expectation of near-term PATMI weakness. This has been on the basis of new initiatives coming on line, ramping up and not contributing fully yet. We expect higher earnings in FY19 due to projects (WTE plant, sludge treatment plant, Pasir Ris-Bedok public waste collection) starting to contribute meaningfully.
Opportunity: The National Environment Agency had announced the appointment of a consultancy team for the development of an Integrated Waste Management Facility (IWMF) at Tuas View Basin. This could be an opportunity for 800 Super to grow its business along its core competency of waste management.
Maintain Accumulate; lower target price of $1.30 (previously $1.35)
We have adjusted our FY18/FY19 revenue by -4.3%/-3.8% and PATMI by -10.5%/+2.7% from previous. We have also adjusted our depreciation assumption, which has raised our cash flow estimates.
We like the stock for its future earnings growth from the new projects that will contribute meaningfully in FY19e. Our target price gives an implied FY18e forward P/E multiple of 19.1 times and FY19e forward P/E multiple of 15.5 times.