Waste management group 800 Super Holdings Limited launched its initial public offering (IPO) on July 6, the fourth Catalist listing this year.
The group offered 32.2 million placement shares at S$0.22 each, comprising 30.2 million new shares and two million vendor shares.
On July 15, the group made a strong trading debut in SGX Catalist, closing S$0.31 per share, 43 per cent above its IPO offer price.
800 Super is one of four licensed public waste collectors appointed by the National Environment Agency (NEA).
Founded in 1986, the group provides waste management and recycling; cleaning and conservancy; and horticultural services.
800 Super services a whole range of clients from both public and private sectors. Some of its biggest customers include Marina Bay Sands, the Singapore Zoological Gardens, the Singapore Police Force, and Changi Airport Group, among others.
In 2005, it clinched its first public waste collection contract, worth S$94.7 million, for the collection, removal and transportation of waste in the Ang Mo Kio – Toa Payoh sector.
A year after, the group bagged a S$48.0 million tender from the Ministry of Education to provide cleaning services to close to 90 schools for four-and-a-half years.
The group registered a net profit of S$5.2 million for the 12 months ending June 30, up 51 per cent from a year ago. Revenue rose 14 per cent over the year to S$69.6 million.
800 Super’s chief executive officer William Lee shared with Biz Daily what made them decide to go public, including his group’s strategies to becoming a leading environmental solutions provider in Singapore.
Waste management industry is a big industry in Singapore, and you’re one of the four NEA-licensed public waste collectors. How would you differentiate your group from the rest?
We are different from our competitors in that we provide a comprehensive environmental solutions to our customers. As a one-stop services provider, we are able to provide a range of services which covers waste disposal, recycling, cleaning and conservancy and horticultural services.
Thus, we are able to cater to the wide spectrum of demands and requirements of our customers and provide benefits including cost-savings and convenience for them.
In terms of quality, we have implemented stringent quality control and proper operational procedures in our work processes and we constantly upgrade our capabilities.
And lastly, we have a proven track record. We believe that our track record of ongoing and completed private and public projects is a testament to our position as an established and integrated environmental solutions provider. In addition, most of our major contracts are secured through tender where we compete against other established participants in the industry.
What’s your share of the market now?
We are one of the four big players in the field now. Based on 2009 financial records, we are now no. 2 or no. 3 in terms of revenues
Revenue rose 14 per cent last year to S$69.6 million. What accounts for the growth in your topline?
The topline growth was contributed by a number of factors. First was our continued focus on public sector projects, which enabled us to win contracts which are substantial enough to support revenue growth. Secondly, we always look for growth opportunities in other segments such as horticultural services and street cleansing. And thirdly, we have a very competitive pricing in bidding for tenders or awards.
Revenues are mostly coming from government contracts. Any plans to widen your revenue sources like maybe tapping more of the private sector?
Diversifying into private sector as well as focusing on other public sector organisations that we are currently not serving have always been part of our strategy.
Of the public waste collection market in Singapore, it is divided into nine areas or sectors. Currently we are only in just one sector (Ang Mo Kio – Toa Payoh), so there’s a big room for growth for us.
So as we focus on servicing both public and private sectors, expect us to participate in upcoming tenders available out there. In particular, we will participate in upcoming tenders for the eight other sectors (areas) in public waste collection. As and when the previous contract ends, we will join in the bidding.
Technology is very central to waste management industry. What’s your strength on this area?
We always make it a point to go on trade shows here and abroad for us to know what’s the latest technology out there.
In fact, for our horticultural services, we use technology and equipment from Europe. We even have customised equipment and vehicles to fit the various needs of our clients.
What’s your take on industry prospects and what is the overall market opportunity for your group?
Today we are facing a very positive industry outlook. Demand for waste management services depends on the volume of waste generated, which is broadly determined by population growth, economic conditions, consumer lifestyle and standard of living. And all these factors are currently present in Singapore.
Another factor which will contribute to the growth of the industry is the implementation of environmental initiatives by regulatory authorities. For instance, in October 2010, the Singapore government announced that it will be stepping up the frequency of recyclable waste collection in a bid to improve the rate of recycling in Singapore.
Under the new public waste collection contract for the Pasir Ris−Tampines sector, recycling bins are to be placed at each HDB block, instead of one bin for every five HDB blocks, and recyclables will be collected from HDB residents daily, instead of fortnightly.
Initiatives such as this will stimulate greater demand for our waste management services. We believe that the same factors contributing to the demand of the waste management services will also contribute to growth in the demand for cleaning and conservancy services in Singapore.
After over 20 years in the waste management industry, what prompted you to go public?
We started as a general waste management collector until we reached the point of being one of the four NEA-licensed public waste collectors. So we’ve been through the process, thus, we know the demands in the market right now.
For one, the capital expenditure is so high for each of the project, not to mention the initial investment of purchasing all the vehicles plants, bins, etc… before bidding for each project.
If you have noticed, we are the only SME to be awarded such big contract by NEA. So this IPO is the next phase of growth for us.
This IPO is also a platform for us to have more organic growth.
Currently, we have difficulty in attracting talents to join us. Maybe they don’t want to work in a “rubbish” company like us. So now that we are listed, it will certainly raise our profile in terms of attracting people to join 800 Super Holdings.
Aside from having all the latest technology and high standards in what we do, we also believe that having the right talent will help us achieve the kind of growth that we want going forward.
What are the main challenges for your business going forward? How do you intend to overcome it?
Well, one of it is attracting more talents to join us as we grow.
NEA has also set very high standards in the waste collection process. So in terms of technology, we always have to keep on par with the rest.
Basically what we consider as a major challenge is to always keep up with the best practices in Singapore waste collection industry.
Tell us more about your expansion plans.
We intend to move into the waste treatment and renewable energy business. So we are now exploring the feasibility of those areas.
We are also looking at potential investments or acquisitions in overseas markets like India and the Middle East.
Finally, what can the investors expect from you?
I’m happy to tell them that we are fundamentally sound and we service an industry that is recession-proof.
In terms of our dividend policy, we intend to recommend and distribute dividends of not less than 20 per cent of net profit attributable to shareholders for financial years 2011 and 2012.
