One of Europe's leading waste-to-product companies
Updated August 2024
Market/Symbol
LON:RWI
Price
£6.391.59%
Market Cap
£515m
PE Ratio
14.37
Average Volume
100k
Pricing delayed 2 hours. Sep 16, 2024 6:00 AM
Investment thesis
Renewi
Renewi is one of Europe’s leading waste-to-product companies turning waste into low-carbon secondary raw materials. It’s primarily located in the Netherlands and Belgium. Its activities span the collection, processing and resale of industrial, hazardous and municipal waste. They invest in cutting-edge technologies to improve recycling processes and efficiency. The company is deeply committed to sustainability, helping to reduce carbon footprints and promote environmental responsibility. Increasing regulations around waste management and recycling provide a favourable market environment for Renewi’s services. They have shown consistent revenue growth, supported by strong market demand for recycling.
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Renewi will benefit in the long run from new regulations in several ways. The European Union and National Government policies are increasingly pushing for circular economy practices. These include eliminating landfills and reducing incineration, which aligns with Renewi's goal of diverting waste from incineration to recycling. Renewi's expertise and infrastructure position them well to capitalise on these regulatory trends. Additionally, Renewi has invested significantly in new technologies and facilities, such as advanced sorting lines and bio-LNG facilities. While these improve their operational efficiency, they also ensure compliance with evolving regulations, thereby future-proofing the business against stricter environmental standards. The increased demand for recycled materials driven by legislative changes creates more market opportunities for Renewi. Regulations that mandate higher recycling rates and the use of secondary materials directly support Renewi's business model focused on producing high-quality recyclates. This alignment with regulatory requirements enhances Renewi's competitive advantage and long-term growth prospects.
Renewi overcomes regulatory and compliance challenges by engaging with policymakers and hiring experienced strategists. They reduce market volatility by investing in cutting-edge technology and implementing dynamic pricing. Renewi also tackles legacy problems by selling off non-core operations and concentrating on high-quality secondary materials to increase financial stability margins.
Renewi is committed to sustainability and driving the transition to a circular economy, which emphasises waste reduction, material reuse, and recycling to create a sustainable loop. They use innovative automated sorting technologies to efficiently separate various forms of waste, as well as technology to optimise sorting and processing, decreasing human error and increasing speed. They are aiming to achieve a recycling rate of 75%, known as Mission75, by incorporating energy-efficient practices to reduce the carbon footprint and operational costs, as well as embracing circular economy models to recycle and reuse materials, thereby reducing waste and improving resource efficiency. They are also actively investing in technologies and processes that enhance the sustainability of their operations.
Over the last year, Renewi has been recognised by major financial institutions and rejected a bid that fundamentally undervalued the business. The Board is open to all means of maximising shareholder value.
Following a strategic review of its UK Municipal operations, Renewi entered into a binding agreement to sell these assets to Biffa Limited. This sale is expected to enhance Renewi's free cash flow by €15-20 million annually, contributing to an EBIT margin expansion of at least 50 basis points. Moreover, the agreement significantly reduces the group's balance sheet risk by replacing unpredictable UK Municipal liabilities and onerous contract provisions with conventional, competitively priced debt financing. This transaction also frees up resources and management's time, allowing Renewi to concentrate on strategic initiatives aimed at driving stronger growth.
Company Research
Research
Team
Mark Thys
Chief Operating Officer Commercial Waste
Mark joined Renewi in May 2021 as the Managing Director of Commercial Waste Belgium. Prior to this, he served as the Global Chief Transformation Officer for Eurofins Scientific. Mark's career includes...
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