Renewi - Non-core disposal further reduces gearing
The previously flagged intention to sell Reym has crystallised through the announced disposal to REMONDIS Group for an EV of €64m (or 5.4x EBITDA). This move modestly dilutes our earnings estimates, further reduces net debt and reinforces Renewi’s waste-to-product recycling credentials. Gearing levels may still be high for risk-averse investors currently but the trend is clearly downwards. P/E multiples remain firmly in single digits currently and our estimates show a yield crossover in FY21.Renewi is a recycling companies. Co. operates in four divisions: commercial, which is engaged in sorting and recycling for, amongst others things, paper, cardboard, wood, plastics, metals and Construction and Demolition waste; hazardous, which is engaged in treating contaminated soil and water, as well as for the disposal of a range of hazardous waste such as waste paints and solvents; municipal, which operates waste treatment facilities for U.K. and Canadian city and county councils under long-term contracts; and monostreams, which produce materials from waste streams in specific end markets such as glass, electrical and electronic equipment, organics and minerals.
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