Cleanaway Remains Overvalued Amid Subdued Core Waste Volume Growth
We still view no-moat Cleanaway as significantly overvalued, with investors overestimating the longer-term earnings leverage to waste volume growth, which we view as tracking at a 3% CAGR over the next five years. We maintain our AUD 0.90 fair value estimate. We believe the current share price of AUD 1.35 implies roughly 5% volume growth per year over the next five years, which we think is unrealistic, considering intense industry competition and a lack of economic moats throughout the industry....Cleanaway Waste Management is focused on the following segments: Solids, which comprises the collection, treatment, recycle and disposal of all types of solid waste streams, including general waste, recyclables, construction and demolition waste and medical and washroom services; as well as Liquids and Industrial Services, which comprises the collection, treatment, processing and recycling of liquid and hazardous waste, including industrial waste, grease trap waste, oily waters and used mineral and cooking oils in packaged and bulk forms for resale, disposal and to produce fuel oils and base oils, as well as services including industrial cleaning, vacuum tanker loading, site remediation.
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