-Cleanaway pursues growth with
-Costs to increase
-Carbon goals should provide further opportunity for investors
With
The company has highlighted the waste-to-energy sector as its largest investment opportunity, and outlined an intention to build WTE facilities in both
The facilities will use residual waste otherwise marked for landfill to fuel power generation, and with the company anticipating each of these facilities will deliver a 300-500,000 tonne capacity annually, Cleanaway's landfill sites should also benefit from some reduction in volume and therefore an extended life expectancy. The company has suggested it will utilise low-emission technology modelled by similar projects in
Opportunity outside energy-from-waste
The company outlined six pillars of targeted growth within its strategic plan, including construction and demolition, plastic recycling, food organics & garden organics (FOGO), and broadly growing collection capacity.
Within the construction and demolition space the company believes there is further potential opportunity, with the Victorian and Tasmanian awards both due in the first half of FY23. Some market analysts anticipate the company will focus on the
The FOGO market also presents one of Cleanaway's fastest growing opportunities, with local councils looking to implement schemes encouraging increased FOGO recycling. Investment in the market is also significantly less than what is required for the larger WTE opportunity, but has potential to offer meaningful returns if the company can secure sizeable market share.
The company's strategic plan also outlined the importance of carbon targets to both its 2030 and 2050 strategic plans, and emissions goals will be announced in August. With Cleanaway's current emissions derived 79% from methane and 21% from carbon dioxide the company sees landfill gas capture as an opportunity moving forward.
With four of the brokers within The FNArena database updating on Cleanaway following the company's growth strategy deep-dive, two are equivalent Buy rated, one is Hold rated and one is equivalent Sell rated, with a combined average target price of
Morgans has issued decreases to its earnings forecasts for Cleanaway given the anticipated higher costs, and notes this drives a -
Credit Suisse, which cut its rating on Cleanaway to Underperform from a previous Neutral, holds a target price of
While Morgan Stanley finds the market is undervaluing the importance of a well-rounded environmental, social and governance (ESG) performance to Cleanaway, it notes the company's existing circular economy exposure is already well received by the market, and expects further environmentally aligned targets will benefit the company. Morgan Stanley highlighted part of the company's additional annual
Macquarie analysts highlighted the company's WTE opportunities will add to the attraction of an already high-return investment. The broker particularly noted Cleanaway's resilience in a recently volatile market, and expects this will continue. Macquarie finds the company well positioned to capitalise from the multitude of waste investment opportunities available to it, but does note the funding structure of investment is still being firmed up. Macquarie is Outperform rated with a target price of
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