800 Super Holding Ltd’s Latest Earnings: What’s Next After 111% Jump in Profit?

Last Friday, 800 Super Holdings Ltd (SGX: 5TG) reported its second quarter earnings report for its fiscal year ending 30 June 2017 (FY2017). The reporting period was from 1 October 2016 to 31 December 2016.

As a quick background, 800 Super is an environmental services provider for both the private and public sectors. The firm’s services include waste management, cleaning and conservancy, and horticultural.

Financial highlights

The following’s a quick rundown on some of the latest financial figures for 800 Super:

  1. Revenue for the second quarter was $78.8 million, up 3.4% compared to the same quarter a year ago.
  2. Net profit more than doubled year-on-year from S$1.72 million to $3.63 million. 800 Super benefitted from lower operating and finance expenses.
  3. Earnings per share (EPS) saw a 115% spike from 0.96 cents in the fiscal second quarter a year ago to 2.03 cents in the reporting quarter.
  4. Cash flow from operations was $6.1 million with capital expenditure coming in around $7.1 million. This puts the waste management firm in negative free cash flow territory to the tune of $1 million. In the same quarter a year ago, 800 Super produced positive free cash flow of $4.51 million ($8.83 million in cash flow from operations and $4.32 million in capex).
  5. As of 31 December 2016, 800 Super had $19.3 million in cash and equivalents and borrowings of about $49.8 million. This is an improvement from the end of the last fiscal year (FY2016), when the company had around $12.1 million in cash and equivalents and borrowings of about $46 million.

In all, there were some positives and negatives in the quarter. On the positives, 800 Super saw its profit soar and its balance sheet improve. On the negatives, the company’s top-line only increased in the low single-digit percentage range, it reported negative free cash flow, and the balance sheet remains in a net debt position.

800 Super declared an interim dividend of $0.01 per share. The waste management provider did not declare an interim dividend in the same fiscal quarter a year ago.

Operational highlights and thoughts on the future

800 Super’s revenue increased due to new contracts signed and revised pricing on renewed contracts. The firm’s executive chairman, Lee Koh Yong, summarized the reporting quarter with a few words:

“The Group continued to perform well in HY2017 [the first half of the fiscal year 2017], delivering a strong set of results. We will continue to deepen our capabilities in existing industries and seek new avenues of growth to enhance our shareholders’ value.”

800 Super said that its WTE (waste-to-energy) plant in Tuas South is progressing as planned and is expected to be completed in the second quarter of 2017. The WTE plant will be supplying green electrical energy to other facilities under 800 Super.

The waste management provider also expects to remain profitable for its next financial period.

At its closing share price of $1.09 last Friday, 800 Super trades at about 9.8 times trailing earnings with a dividend yield of 3.2%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.