08
Sep

Bingo Cleans Up On First Result

The market liked the first result from Bingo Industries (BIN) delivered in mid August. Prior to the result, Bingo traded at $1.87 but has shifted up a level to $2.20 currently.

Bingo Industries was listed at $1.80 in May 2017 and Bingo was highlighted in our April monthly report, our June quarterly and again in the July monthly as a stock with favourable attributes.

Formerly a family business, Bingo has developed a strong market position in the collection and recycling of general building waste in NSW. The company has invested in recycling capability, the collections network and systems. This provides an advantage over competitors in service, cost to serve and the ability to meet the sustainability targets of clients. The importance of sustainability has not been a major focus in the fragmented waste business of the past.

Cash flows are being re-invested into growing market share in the corporate and industrial detritus segment, a new market recently entered. They are also looking to replicate the NSW model interstate. The first Victorian acquisition was announced in August.

Quest are interested in the recycling potential of this business and the opportunity in Commercial and Industrial waste disposal that is driven by the current strength in residential and infrastructure activity. Bingo has been the subject of a recent television program which did not reveal any new or unexpected issues for our research team.

Post result, Bingo is displaying classic small cap effect behaviour post good news. This includes wider broker coverage, increased turnover and elevated investor interest. It is apparent that many investors may have passed the stock over at the IPO.

The company is however in the first stage of our Quest “7 Stages of Growth” behavioural  model. Our price target has increased in August and we see further potential future catalysts as the company extracts value from the recent acquisitions.