Company Update: 30 March 2023
Turning trash into treasure
- Enviro-Hub Holdings Ltd boasts a diverse portfolio of operations and investments. The company engages in e-waste and metal trading, refining, and recycling; carries out piling contracts and construction services; provides rental and servicing of machinery; manages property investments and operations; and manufactures and trades healthcare products.
- We initiate with an OUTPERFORM recommendation and TP of S$0.045, based on FY23F total market value. We expect FY23-25F PAT to grow at a CAGR of 11.2% on an increase in processing volume of e-waste recycling segment, gradual recovery of glove industry, and an increase in contributions from new pharmaceutical retail outlets.
Enviro-hub used to focus more on their building and construction and property investments and management sectors, however, after the acquisition of Malaysian glove manufacturer, Pastel Glove Sdn Bhd, and expansion into the pharmaceutical retail scene in Malaysia, under the brand ‘R-Pharmacy’, they have shifted their focus towards the development of their e-waste recycling and healthcare segments. The group views these areas as offering strong long-term growth prospects and has plans to continue expanding in the healthcare sector.
FY22 financials review
Revenue rose 9.2% on higher contributions from e-waste recycling and healthcare businesses. With Enviro-Hub now generating a positive operating cash flow. Proposed dividend of SG 0.1 cent per share.
1H22 financial update: Growth of new segmental revenue
Enviro-Hub reported revenue of S$22.8mn for the period,
representing a 29.0% YoY increase, and a 43.2% YoY rise in net
profit attributed to owners. The revenue growth was driven
primarily by a 14.6% YoY increase in sales from the recycling
business. During 1H22, the newly acquired healthcare
segment remained a consistent contributor to overall
revenue, with sales of S$3.3mn.
Valuation & Action
We initiate Enviro-hub with an Outperform recommendation and a S$0.045 Target Price based on the SOTP valuation of its 3 segments namely, Recycling, Property and Healthcare.
Margin pressure due to competition and oversupply in the glove industry. Rising interest rates and fluctuations in exchange rates will impact Enviro-hubs reported revenue and profits.