Hot stock: 800 Super falls more than 25%

CATALIST-LISTED environmental services provider 800 Super has slipped 26.06 per cent in trading heading into Wednesday's lunch break, shedding 21.5 Singapore cents to trade at 61 Singapore cents as at 11.55am, putting it among the top five losers.

The stock saw heavy turnover of 1.71 million units, more than double the 503,000 units in turnover on Tuesday.

It is also at its lowest in the year-to-date, down from a high of S$1.24 touched in mid-January.

The slide began not long after the firm - whose core business is in waste management - announced a loss for its fiscal fourth quarter earnings on the back of higher expenses.

For the three months ended June 30, the group clocked a net loss of S$1.65 million, compared with a S$2.72 million net profit for the year-ago period. Loss per share stood at 0.93 Singapore cent, from an earnings per share of 1.52 Singapore cents for the year-ago period.

Revenue also fell 1.8 per cent to S$37.9 million, mainly due to the completion of term contracts, and the renewal of certain contracts at more competitive prices.

800 Super detailed that purchase of supplies and disposal charges rose 42.6 per cent to S$7.8 million for the fourth quarter, and was up 13.5 per cent to S$26.9 million for the full year. This was mainly attributable to higher production levels for the group's plastic recycling plant, the acquisition of Iwash Laundry (Senoko) consolidated into the group for the second quarter, as well as higher fuel costs.

"The industry which the group is operating, ie the provision of waste management, cleaning and conservancy and horticultural services is highly competitive. As a comprehensive environmental solutions provider, the group is competing on the basis of the range and quality of services provided, timeliness of service delivery and pricing," 800 Super said in its earnings statement.

In its latest research note on the firm, broker Phillip Securities noted "near-term Patmi (profit after tax and minority interests) weakness", but kept the outlook on the company positive.

"This has been on the basis of new initiatives coming online, ramping up and not contributing fully yet. We expect higher earnings in FY2019 due to projects (waste-to-energy plant, sludge treatment plant, Pasir Ris-Bedok public waste collection) starting to contribute meaningfully.

"The National Environment Agency had announced the appointment of a consultancy team for the development of an Integrated Waste Management Facility (IWMF) at Tuas View Basin. This could be an opportunity for 800 Super to grow its business along its core competency of waste management," Phillip's investment analyst Richard Leow wrote in a May note.