Why Are 800 Super Holdings Ltd’s Shares Up By 68% In A Year?

Singapore’s stock market, as represented by the Straits Times Index ETF (SGX: ES3), has not been performing well over the last 12 months – it is down by 2.9%.

But, there are companies in the market that have delivered strong gains over the same time frame. One such company is 800 Super Holdings Ltd  (SGX: 5TG). At their closing price of S$0.82 each yesterday, 800 Super’s shares are up by 68% from where they were on 12 October 2015.

What could have contributed to this market-beating and sharp rise in 800 Super’s share price over the past year? Before we take a look at some possible reasons, let’s first have a quick background on the company.

800 Super is an established environmental services provider for both the public and private sectors in Singapore. The company’s services include waste disposal, cleaning and conservancy, and landscape services. In other words, 800 Super helps keep Singapore clean and green. If you look carefully enough, you may be able to spot the company’s refuse collection lorries plying the streets.

With that, let’s dig into some of the possible reasons behind the strong gains displayed by 800 Super’s shares in the last 12 months:

1. Steady growth in financials over past few years

The table below shows changes in 800 Super’s revenue, earnings per share, and dividends in its last four fiscal year:

Source: S&P Global Market Intelligence

From fiscal 2013 (fiscal year ended 30 June 2013) to fiscal 2016, 800 Super has seen its revenue surge 60% to S$156.4 million. Meanwhile, the company’s earnings per share has nearly tripled from S$0.032 to S$0.094.

Another point worth mentioning is how 800 Super’s revenue has been growing in each year over the timeframe we’re looking at. In fact, it’s the same with the bottom-line if we adjust for a one-off gain of S$5.4 million that 800 Super had logged in fiscal 2015 from the sale of a property.

800 Super has been sharing its spoils with shareholders. As the table above show, the company’s dividend has jumped from S$0.01 per share in fiscal 2013 to S$0.0225 per share in fiscal 2016.

2. There are growth projects underway

800 Super has been working on projects that could expand its business.

According to its latest annual report for fiscal 2016, the company is building a waste to energy (“WTE”) plant at Tuas South. It is expected to be completed in 2017. Once done, it will supply “green electricity” and 800 Super expects the plant to “generate new revenue streams and cost savings.”

During fiscal 2016, 800 Super also “successfully expanded its business footprint regionally with the establishment of a plastic recycling subsidiary in Batam, Indonesia.”

The company believes that its “strategic direction towards downstream waste treatment will create growth opportunities for 800 Super in the long haul.”

At 800 Super’s closing share price of S$0.82 yesterday, it has a trailing price-to-earnings (P/E) ratio of just 8.7. For perspective, the SPDR STI ETF (SGX: ES3), an exchange-traded fund that tracks the Straits Times Index, has a P/E ratio of 12 at the moment.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.