The Bingo (ASX:BIN) share price is up 8% today, 38% in 6 months

Bingo Industries Ltd (ASX: BIN) shares have risen by nearly 8% today amid a broader rise in the ASX, despite no news coming out of the waste management company. Over the last six months, the Bingo share price has also climbed by a healthy 37.6%. This was underpinned by strong net profit results in FY20, which rose by almost 200% on FY19’s numbers.

Here’s a quick rundown on Bingo Industries.

What happened in 2020?

Despite admitting that its business was disrupted by the COVID-19 outbreak, the company still posted healthy full-year results for FY20 in August last year.

Bingo reported a 21% increase in revenue of $486.7 million in FY20, and net profit after tax (NPAT) of $66 million, up by 196%.

Importantly, Bingo reported an operating free cash flow of $160.1 million, up 37.4%, which the company said will allow it to execute its strategies going into 2021.

Bingo issued FY20 dividend payments of 3.70 cents per share, down from 3.72 cents in FY19.

Outlook for 2021

During its annual general meeting (AGM) in November, Bingo advised that it expected COVID-19 headwinds to continue into 2021, with the potential for business interruption.

As a result, Bingo forecast that its group earnings before interest, tax, depreciation, and ammortisation ( EBITDA) margin will decline in FY21 by approximately 2% to 3%, before rebounding to its longer-term target of 30%.

Notwithstanding this, Bingo believes that medium-term tailwinds will still outweigh the short-term headwinds faced by the company.

In an earlier October trading update, Bingo revealed it is set to benefit from the strong government stimulus spending in infrastructure. More importantly, management expected that changes in government policy related to waste management is pivoting towards the company’s business model over the long run.

In particular, the Recycling Modernisation Fund and the Modern Manufacturing Strategy introduced by the federal government will encourage recycling as we move towards a circular economy. According to Bingo, all these changes bode well for its business.

Brief take on Bingo

Bingo is a recycling and waste management company that provides solutions across the entire waste management supply chain.

In the waste management industry, there are three major market segments: construction and demolition (C&D), commercial and industrial (C&I), and municipal waste.

The majority of Bingo’s business is in the C&D segment, and it does not participate in the municipal segment.

C&D waste collection, however, is cyclical, being closely tied to construction activity.

This contrasts with the municipal and C&I waste management segments, in which volumes are relatively stable through economic cycles.

In 2019, Bingo acquired competitor Dial-a-Dump in a $578 million deal that attracted scrutiny from the competition watchdog, the ACCC.

How has the Bingo share performed in 2020?

The Bingo share price has dropped by around 6% over the past year but, as mentioned, it has built momentum over the last 6 months, rising by nearly 38%.

At the current Bingo share price, the company has a market capitalisation of $1.65 billion.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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